The UK government will introduce vehicle excise duty (VED) charges for electric vehicles (EVs) from 1 April 2025, ending their longstanding tax exemption.
The move, first announced by the Conservative government in 2022 and reaffirmed in Labour’s 2024 Autumn Budget, will bring EV taxation in line with petrol and diesel vehicles.
From April 2025, new EVs registered on or after that date will incur a first-year tax rate of £10 before moving to the standard annual rate of £195 from the second year onwards.
Existing EVs registered between 1 April 2017 and 31 March 2025 will automatically transition to the £195 standard annual rate.
Older EVs registered between 1 March 2001 and 31 March 2017 will move into the first VED band with a payable rate, resulting in an annual tax of £20.
The changes will also affect hybrid and alternative fuel vehicles, with the government removing the £10 annual discount for these vehicles.
New electric cars priced over £40,000 will also be subject to the Expensive Car Supplement, which will add an additional charge of £425 per year for the first five years following the first standard rate payment.
The measure is expected to affect a significant number of new electric models, particularly those in the mid-range and premium segments.
HM Revenue and Customs has stated that the changes are intended to ensure a “fairer tax contribution” from all drivers, regardless of vehicle type.
The government argues that as EV adoption increases, taxation policies must evolve to maintain public revenue streams.
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A spokesperson for the Driver and Vehicle Licensing Agency explained: “From 1 April 2025, registered keepers of electric, zero or low-emission cars, vans and motorcycles will need to pay vehicle tax in the same way as registered keepers of petrol and diesel vehicles.
“This change will apply to both new and existing vehicles.”
While the government maintains that the updated VED framework is necessary, concerns have been raised regarding the potential impact on consumer demand for EVs.
Industry analysts suggest that additional tax burdens, particularly the Expensive Car Supplement, could influence purchasing decisions at a time when the UK is working toward increased EV adoption.
With weeks until the changes take effect, motorists are being urged to familiarise themselves with the new tax obligations.
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