Vehicle Tax Changes for Electric and Low Emission Vehicles from April 2025
From 1 April 2025, the UK government will introduce new Vehicle Excise Duty (VED) rules, requiring registered keepers of electric, zero, and low-emission vehicles to pay tax in the same way as owners of petrol and diesel vehicles. This change applies to both new and existing vehicles and marks the end of the current exemption for these vehicle types.
Key Changes to Vehicle Tax (VED)
Removal of Band A (£0 VED)
Currently, electric and low-emission vehicles fall under Band A, which carries no tax liability. However, from April 2025, these vehicles will be moved to the first VED band where tax becomes payable.
How the Changes Will Affect Your Vehicle
Electric, Zero, or Low-Emission Cars Registered on or After 1 April 2025
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You will pay the lowest first-year rate of £10.
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From the second year onwards, you will pay the standard rate of £195 per year.
Electric, Zero, or Low-Emission Cars Registered Between 1 April 2017 and 31 March 2025
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You will pay the standard rate of £190 per year.
Electric, Zero, or Low-Emission Cars Registered Between 1 March 2001 and 31 March 2017
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These vehicles will be moved to the first tax band with a VED charge.
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The annual tax rate for these vehicles will be £20.
Hybrid and Alternatively Fuelled Vehicles (AFVs)
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The current £10 annual discount for hybrid and AFVs will be removed.
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If the vehicle was registered before 1 April 2017, the tax rate will depend on CO2 emissions (check the latest government rates).
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If registered on or after 1 April 2017, you will pay the standard rate of £195 per year.
Electric Vans
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Most electric vans will be moved to the standard annual rate for light goods vehicles.
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You should check current government rates to determine the applicable charge.
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Additional Rate for Vehicles Over £40,000
From 1 April 2025, new electric and zero-emission vehicles with a list price exceeding £40,000 will be subject to the expensive car supplement. This means:
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Owners will pay the standard rate (£195 per year) plus an additional supplement for five years, starting from the second year of taxation.
- As of April 2025 this will rise to £425 per year (for 5 years) with the VED increase to £195 you can expect to pay £620 per year.
Summary of Costs for EV Owners from April 2025
| Vehicle Type | First-Year Rate | Standard Rate | Expensive Car Supplement (if over £40k) |
|---|---|---|---|
| EVs registered on or after 1 April 2025 | £10 | £195 | £195 + £425 = £620 (for five years) |
| EVs registered between 1 April 2017 - 31 March 2025 | N/A | £190 | N/A |
| EVs registered between 1 March 2001 - 31 March 2017 | N/A | £20 | N/A |
| Electric vans | N/A | Light goods vehicle rate | N/A |
What This Means for EV Owners
These changes signal a shift in government policy, removing incentives that previously encouraged the adoption of electric and low-emission vehicles. EV owners will need to factor in these additional tax costs when considering vehicle purchases or fleet management decisions.
For businesses and individuals leasing or purchasing new electric vehicles, particularly those over £40,000, the added expense of the expensive car supplement may influence future buying decisions.
Stay informed and plan ahead to manage the impact of these tax changes on your vehicle costs. If you have any questions about how this affects your leasing agreement or fleet management strategy, get in touch with us today!