Introduction of Vehicle Excise Duty for zero emission cars, vans and motorcycles from 2025
This tax information and impact note is about the introduction of Vehicle Excise Duty for zero emission cars, vans and motorcycles from 2025. This will apply to new and existing electric vehicles.
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This measure will require owners of electric vehicles to pay Vehicle Excise Duty as their petrol and diesel counterparts do. This measure was announced at Autumn Statement 2022.
Zero emission cars first registered on or after 1 April 2017 will be liable to pay the lowest first year rate of VED which currently applies to vehicles with CO2 emissions 1 to 50g/km. From the second year of registration onwards, zero emission cars will move to the standard annual rate.
The Expensive Car Supplement exemption for EVs is due to end in 2025. New zero emission cars registered on or after 1 April 2025 will be liable to pay the expensive car supplement where eligible (currently those with a list price of or exceeding £40,000 are liable).
Cars first registered between 1 March 2001 and 30 March 2017 in Band A will move to the Band B rate. This will effectively abolish the Band A rate.
Most zero emission vans will move to the standard annual rate for petrol and diesel light goods vehicles.
Zero emission motorcycles and tricycles will move to the annual rate for the smallest engine size.
Rates for other AFVs (alternatively fuelled vehicles) and hybrids will also be equalised by removing the £10 annual discount.