From 1 April 2025, registered keepers of electric, zero or low emission cars and vans 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.

This new measure removes band A under the existing VED system which is currently £0. Vehicles in this band will be required to move to the first band where a rate becomes payable.

What does this mean?

As of 1st April 2025, the cheapest £0 VED rate will be abolished, meaning all cars built after April 2017 - regardless of whether they are petrol, diesel, hybrid or electric-powered will pay the standard flat rate of road tax. This means that EVs will no longer be exempt from VED and hybrid cars no longer benefit from a slight discount.

Electric vehicles worth over £40,000 will be liable for the extra Road Fund Licence charge.

Changes to the rates of car tax will be put into place from 1 April 2025 - and with that date fast approaching its important to know what's changing. This is how it will affect you:

• Electric vehicles (EVs) are no longer exempt from paying Vehicle Excise Duty, or car tax. Although EVs registered after the 1 April date are only liable for a first-year rate of £10 until 2029, those that cost more than £40,000 will also have to pay the £425 a year 'Expensive Car Supplement', otherwise known as the luxury car tax.
• EVs registered between 1 April 2017 and 31 March 2025 will now have to pay the same standard rate of road tax (now £195 a year) as all other motorists.
• All cars emitting between 1-50 g/km of CO2 (that's most plug-in hybrids) will see the first year tax bill rise to £110. Currently hybrids in this band pay zero VED in the first year, while petrol and diesel cars pay £10.
• New cars emitting between 51-75g/km of CO2 will see car tax increase from £30 (or £20 for hybrids) to £135.
• All other rates for cars emitting 76 g/km of CO2 and above will double from their current level for 2025-2026.

Electric Buyers Don't Get Caught Out

If you register an electric car worth over £40,000 from 1st April 2025 it will be liable for the extra Road Fund Licence charge, also known as the Luxury Car Tax, which is an additional £425 per year on top of new standard £195 VED payments for years two to six of the vehicle's life. Electric vehicles are exempt from this extra charge if registered before 1st April 2025.