Fully electric cars have been exempt from Vehicle Excise Duty (VED) since 1st April 2017 based on a government incentive to increase sales of zero emission vehicles. But with government coffers beginning to suffer from reduced fuel duty revenues, on 1st April 2025 that all changes.
From this date VED rates for EVs will be aligned with petrol and diesel vehicles at the following levels:
- First-Year Rate: New EVs registered on or after 1 April 2025, will pay a reduced first-year rate of £10.
- Standard Annual Rate: From the second year onward, these vehicles will incur the standard annual VED of £195 which also applies to existing owners with cars registered after 1st April 2017.
But that is not all, from 1st April 2025 an expensive car supplement will apply to new EVs costing more than £40,000.
- Expensive Car Supplement: EVs with a list price exceeding £40,000 will be subject to an additional £425 per year, applicable from the second to the sixth year of registration. The supplement aligns with policies previously applied to high-value petrol and diesel vehicles.
However, companies and EV drivers can delay the VED increases for their existing vehicles if they renew by 31 March 2025. All they need to do is renew their tax on the government’s website before this date by putting in the car’s number plate and the 12-digit reference number on their V5C (logbook).
Andrew Holgate Jaama CEO commented “This is a tough but understandable move by the government to increase revenue! The Expensive Car Supplement was first introduced in April 2017 and has not gone up with inflation. The CPI increase over the last 8 years is about 30% which means that a car priced at just over £30,000 in 2017 would now attract the Expensive Car Supplement if it was purchased new today with the associated inflation applied. The supplement will also be applicable to the majority of EV cars as their average car price is well over the £40,000 threshold.”