News: New Tax Laws for Vehicles in 2025?

Changes to Vehicle Tax for Electric and Low-Emission Vehicles from April 2025

From 1 April 2025, the vehicle taxation landscape in the UK will undergo a significant shift. Registered keepers of electric, zero-emission, and low-emission cars, vans, and motorcycles will no longer be exempt from Vehicle Excise Duty (VED), aligning their tax obligations with those of petrol and diesel vehicles. This change reflects the government’s evolving approach to environmental incentives and road maintenance funding, broadening the tax base to include cleaner vehicles. Here's a detailed breakdown of what these changes mean for you.

What’s Changing?

Under the current system, Band A vehicles, including electric and low-emission models, pay £0 in VED. From 1 April 2025, this band will be removed, requiring all vehicles to pay a VED rate. The changes will affect vehicles differently depending on their registration date, type, and emissions level.

How These Changes Will Affect Your Vehicle

Electric, Zero, and Low-Emission Cars

Registered on or after 1 April 2025

• First-Year Tax Payment: A minimal rate of £10 for the first year.
• Subsequent Years: From the second year onwards, owners will pay the standard rate, set at £195 annually.

Registered Between 1 April 2017 and 31 March 2025

• Owners will move directly to the standard rate of £195.

Registered Between 1 March 2001 and 31 March 2017

• These older models will transition to the first band with a payable rate, set at £20 annually.

Hybrid and Alternatively Fuelled Vehicles (AFVs)

The existing £10 annual discount for hybrid and AFV owners will be discontinued. Rates will vary based on registration date:

• Before 1 April 2017: VED rates will depend on the vehicle’s CO2 emissions. Owners should check current emission-based rates.
• On or After 1 April 2017: A flat standard rate of £195 will apply.

Electric Vans

Most electric vans will transition to the standard annual rate for light goods vehicles, in line with their petrol and diesel counterparts. Current rates should be referenced to determine specific amounts.

Electric Motorcycles and Tricycles

Electric motorcycles and tricycles will move to the annual rate for the smallest engine size, ensuring consistency across vehicle types.

Additional Rate for Expensive Vehicles

For electric and zero-emission vehicles registered on or after 1 April 2025 with a list price exceeding £40,000, an expensive car supplement will apply. This means owners will pay the standard rate plus the additional charge for the first five years from the second licence renewal.

What Does This Mean for You?

The new system represents a departure from the incentives previously offered for purchasing electric and low-emission vehicles. While electric and hybrid vehicles still retain lower operational costs compared to petrol and diesel models (e.g., cheaper charging and lower maintenance), owners will need to account for the added expense of VED in their annual budgets.