New Driving Laws and Regulations For 2025

Keeping up to date with the new DVLA rules for UK drivers is essential to avoid fines and stay compliant with road safety regulations. From stricter environmental guidelines to safety standards for commercial vehicles, these updates will have a direct impact on drivers across the country. Understanding these changes will help you prepare effectively, whether you're a private motorist, a business owner, or managing a fleet of vehicles. 

In this blog, car leasing experts Nationwide Vehicle Contracts explore some of the new driving laws and regulations set to arrive in the UK in 2025. 

From 1 January 2025, carmakers must ensure that 22% of new cars and 10% of new vans sold in the UK are fully electric. This is part of the government’s plan to reduce emissions and prepare for the 2035 ban on new petrol and diesel vehicles.

Manufacturers that don’t meet the targets could face fines or buy credits from others who exceed them. While the mandate doesn’t directly affect buyers, it’s likely to mean more electric models and stronger incentives to go electric.

From 1 April 2025, electric vehicles will no longer be exempt from Vehicle Excise Duty (VED). New EVs registered on or after this date will pay £10 in the first year, then £165 annually from year two.

EVs priced over £40,000 will also be hit with the Expensive Car Supplement, currently £410 per year, which they were previously exempt from. Petrol and diesel cars emitting over 76g/km CO₂ will see their first-year tax double compared to 2024/25.

Separately, EVs will remain exempt from the London Congestion Charge until 25 December 2025, after which they’ll have to pay the standard daily fee.

Benefit in Kind (BiK) is a tax on perks provided by your employer, like a company car, often through a salary sacrifice scheme. The amount you pay depends on the car’s CO₂ emissions.

From April 2025, Benefit in Kind (BiK) rates will go up by 1% across all CO₂ bands, including for electric vehicles. Fully electric cars registered after 6 April 2025 will be taxed at 3%, up from the current 2%.

Rates will continue rising each year until at least 2029/30, but EVs will still be taxed far less than petrol, diesel, and hybrid models. The top BiK rate remains 37% for cars emitting over 154g/km CO₂. HMRC has also pushed back mandatory BiK payrolling to April 2027, giving employers more time to adjust.

To see how these changes affect commercial vehicles, check out our guide: 2025 Pick-Up Truck Tax Changes: How HMRC’s New Rules Affect You.

Transport for London (TfL) has confirmed that the Cleaner Vehicle Discount (CVD), which currently allows electric and hydrogen-powered vehicles to be exempt from the Congestion Charge, will end on 25 December 2025. From this date, all vehicles, regardless of their emission status, will be subject to the standard daily charge of £15 when driving within the Congestion Charge zone during operational hours.

It's important to note that the Congestion Charge does not apply between 25 December and 1 January (inclusive). Therefore, while the policy change takes effect on 25th December 2025, the practical impact for drivers will begin on 2nd January 2026.

Fuel duty will stay at 52.95p per litre until March 2026, following confirmation in the Autumn Budget 2024. This includes the temporary 5p cut introduced in 2022, which was due to end but has now been extended.

Fuel duty has been frozen since 2011, meaning it hasn’t risen with inflation for over a decade. The government says keeping the freeze in place will help ease cost-of-living pressures for drivers and businesses.

While the freeze offers short-term relief at the pumps, it comes at a cost to public revenue, raising questions about whether it can be maintained beyond 2026.

The UK government has announced plans to launch the Fuel Finder scheme by the end of 2025, subject to the passage of necessary legislation and parliamentary time. This initiative will require all petrol stations across the UK to share real-time fuel prices, enhancing transparency and allowing consumers to compare prices more easily.

The scheme is a response to concerns about inconsistent pricing and reduced competition in the fuel market. By providing near real-time price data, the Fuel Finder aims to help drivers make informed decisions and encourage fair pricing among fuel retailers.

By the end of 2025, Scotland will introduce a default 20mph speed limit in built-up and residential areas. The aim is to reduce accidents and improve safety for pedestrians and cyclists.

Glasgow has already rolled out 20mph zones in parts of the city, with more areas to follow. This local approach is helping shape the wider national rollout.

Most 30mph roads in towns and cities will shift to 20mph, though councils can make exceptions. Drivers should look out for new signs and adjust to lower limits in residential areas.

Self-driving cars may hit UK roads as early as 2026, following the Automated Vehicles (AV) Act passed in May 2024. The law sets out strict safety standards, requiring autonomous vehicles to match or exceed the performance of a safe human driver before they’re allowed on public roads.

Each vehicle must pass government-approved tests, showing it can handle real-world conditions and unexpected hazards. Safety remains the top priority. The government sees this as a way to reduce road deaths, improve transport access, create jobs, and boost the economy. While countries like the US and China are already using the tech, the UK is only now catching up.

For a deeper look at how self-driving cars work and what to expect, read our blog: Autonomous Cars: Are We Ready to Let Go of the Wheel?

The 2025 driving law changes will impact how you drive, what you drive, and how much it’ll cost. Whether you're a commuter, a company car user, or manage a fleet, here’s what to expect:

• Leaning Towards Going Electric? More electric models will hit the market as manufacturers work to meet government targets. But from April 2025, EVs will no longer be exempt from road tax—and models over £40,000 will face the Expensive Car Supplement. The upfront costs might stay lower, but running costs are set to rise.
• Company Car Drivers Take Note: Benefit in Kind (BiK) rates will increase by 1% across all bands. EVs will go from 2% to 3%, but still offer tax advantages over petrol and diesel models. Worth factoring in if you’re renewing a company car.
• Planning to Drive in London? The Congestion Charge exemption for EVs ends on 25 December 2025. From then, all vehicles will need to pay the standard daily rate. If you commute into central London, that’s a cost to plan for.
• Fuel and Running Costs: Fuel duty remains frozen until March 2026, but after that, prices at the pump could rise. The Fuel Finder scheme, expected by the end of 2025, should make it easier to compare prices and save money.
• Living or Driving in Scotland? A default 20mph limit will roll out in built-up areas by the end of 2025. Places like Glasgow have already started. Expect slower limits and more enforcement in towns and cities.
• Looking Ahead to Automation: Self-driving cars could arrive as early as 2026. While still in testing, the UK’s new law lays the groundwork for autonomous tech on public roads. It won’t affect most drivers yet, but it signals what’s coming.

These changes might not all hit at once, but together they signal a shift in how we drive, what we drive, and how much we pay for it. Staying ahead of the rules means fewer surprises and possibly a better deal when it’s time to choose your next car.

For more information about new driving laws, why not check out our 7 laws you need to know before driving in the snow blog? We also produce a range of weekly blogs on various topics, which can be found in the blog section of our website.

Nationwide Vehicle Contracts are one of the UK's leading car leasing brokers and offers a range of leasing deals to suit every need. To find out more, check out our comprehensive car leasing guides or call one of our experts on 0345 811 9595.