Exploring the upcoming changes to Vehicle Excise Duty for electric vehicles

Vehicle Excise Duty (VED) is a crucial part of the UK’s tax system, contributing to the maintenance of our road infrastructure. As part of the government’s commitment to a fair and sustainable tax regime, significant changes are on the horizon for electric vehicles (EVs). From 1 April 2025, EVs will no longer benefit from VED exemptions.

What are the implications of the upcoming vehicle tax changes?

 For electric and low-emission vehicles registered on or after 1 April 2025

• VED exemption ending: Electric vehicles will no longer be exempt from VED starting 1 April 2025.  
• Tax rates: Owners will need to pay the lowest vehicle tax rate in the first year, followed by the standard annual rate from the second tax payment onwards.
• Expensive car supplement: Vehicles with a list price of over £40,000 will incur an additional charge known as the ‘expensive car supplement’ from the second year onwards.

For electric and low-emission vehicles registered between 1 April 2017 and 31 March 2025

• Tax rate: These vehicles will be taxed at the standard annual rate regardless of their previous exemption status.

For electric and low-emission vehicles registered between 1 March 2001 and 31 March 2017

• Tax rate: Vehicles registered in this period will be taxed according to the first VED band that carries a tax value. This is likely to be based on CO2 emissions, as per the historical VED bands.

For Alternative Fuelled Vehicles (AFVs)

• Discount removal: The £10 annual discount for AFVs and hybrids will be discontinued. The applicable tax rate will be determined by the vehicle’s registration date.

• Tax rates:

• • Before 1 April 2017: Tax rates will continue to vary based on CO2 emissions.

• • On or after 1 April 2017: These vehicles will be subject to the standard tax rate.

For electric vans

• Tax rate: Electric van owners will be required to pay the standard annual tax rate designated for light goods vehicles.

For electric motorcycles and tricycles

• Tax rate: These will now be taxed at the annual rate for the smallest engine size.

Note: Please be aware that the current tax rates are subject to change in 2025. For the most up-to-date information on tax rates and further details about these upcoming changes, visit the GOV.UK website. Additionally, we will provide further updates and insights as more information becomes available.

What could this mean for you?

The changes to VED, starting next year, will financially impact electric vehicle owners by ending the current exemption and increasing the annual costs. Understanding these changes is crucial for effective financial planning and budgeting.

If you have any queries regarding the upcoming changes or would like tailored advice and support, please get in touch today for a complimentary initial consultation.

Email: [email protected]

Phone: 01926 422292