Starting on 1st April 2025, keepers of electric, zero, or low-emission cars, vans, and motorcycles will face new Vehicle Excise Duty (VED) rules. This update means that owners of these vehicles will begin paying tax similarly to those who own petrol or diesel vehicles.
Currently, many low-emission vehicles fall into VED Band A, which is taxed at £0. From April 2025, Band A will be removed, and these vehicles will be moved into the first taxable band. Crucially, this change applies to both new and existing vehicles.
Here’s a breakdown of how these changes will impact you, based on your vehicle’s registration date.
Electric, Zero, or Low Emission Cars
Registered on or After 1 April 2025: First-year rate – £10. Standard rate from 2nd year onwards – £195 annually
Registered Between 1 April 2017 and 31 March 2025: Standard rate – £195 annually.
Registered Between 1 March 2001 and 31 March 2017: First taxable band rate – £20 annually.
Hybrid and Alternatively-Fuelled Vehicles (AFVs)
Registered before 1st April 2017: The rate will vary based on the vehicle’s CO2 emissions.
Registered on or after 1 April 2017: Standard rate – £195 annually
Electric Vans
Most electric vans will be moved to the standard annual rate for light goods vehicles.
Expensive Car Supplement
For electric and zero-emission cars registered on or after 1 April 2025, with a list price exceeding £40,000, you will pay the standard rate (£195) plus an expensive car supplement for the first five years, starting from the second year of ownership.
While these changes may come as a surprise to many, they reflect the government’s broader effort to standardize vehicle taxation. As we approach April 2025, vehicle owners should be prepared for these updates and budget accordingly.
Would you like more help understanding the new vehicle tax rules? Contact one of our accountants for advice.