Vehicle Excise Duty on electric vehicles

The measure

From April 2025 electric cars, vans and motorcycles will begin to be subject to Vehicle Excise Duty (VED) in the same way as petrol and diesel vehicles. The government will legislate for this measure in the Autumn Finance Bill 2022, and have stated that:

• New zero emission cars registered on or after 1 April 2025 will be subject to the lowest first year rate of VED, currently £10 per year. From the second year of registration onwards, they will move to the standard rate, currently £165 per year;

• Zero emission cars registered between 1 April 2017 and 31 March 2025 will also become subject to the standard rate;

• Zero and low emission cars first registered between 1 March 2001 and 30 March 2017, currently in VED band A, will move to VED band B, currently £20 a year;

• Zero emission vans will move to the rate for petrol and diesel light goods vehicles, currently £290 a year for most vans;

• Zero emission motorcycles and tricycles will move to the rate for the smallest engine size, currently £22 a year; and

• Rates for Alternative Fuel Vehicles and hybrids will also be equalised.

This measure also includes the end of the Expensive Car Supplement exemption for electric vehicles in 2025. New zero emission cars registered on or after 1 April 2025 will therefore be liable for the Expensive Car Supplement - currently applicable to vehicles with a list price exceeding £40,000 – for five years.

Who will be affected?

Owners of electric or low emission cars, vans or motorcycles will be affected as the measure will increase the tax cost for any person owning an electric vehicle.

When will the measure come into effect?

The measure will have effect from 1 April 2025.