If you drive an electric vehicle, you need to be aware of these changes to road tax. Currently, electric vehicles (EVs) are exempt from Vehicle Excise Duty (VED) also known as road tax. However, from 1 April 2025, drivers of electric and low emission cars, vans and motorcycles in the UK will need to pay VED, in the same way that drivers of petrol and diesel cars do. In addition, electric cars with a list price that exceeds £40k will no longer be expempt from the “expensive car” supplement.
How the VED tax changes will affect your vehicle
Zero emission cars first registered before April 2017
Zero and low emission cars first registered between 1 March 2001 and 30 March 2017 currently in Band A will move to the Band B rate, currently £20 a year
Zero emission cars first registered between 1 April 2017 and 31 March 2025
Drivers will pay the standard rate under the existing VED system. This is £190 for 2024 but is subject to change for 2025.
Electric and low emission cars registered on or after 1 April 2025
During the first year, drivers will need to pay the lowest first year rate of vehicle tax that applies to vehicles with CO2 emissions 1 to 50g/km. From the second tax payment onwards, these vehicles will pay the standard rate. This is £190 for 2024 but is subject to change for 2025.
Hybrid and alternatively fuelled vehicles (AFVs)
The £10 annual discount for hybrid and AFVs will be removed, and the rate that paid will depend on when the vehicle was first registered. If the vehicle was:
- registered before 1 April 2017 – this rate will depend on the vehicle’s CO2 emissions (check the current rates for this vehicle)
- registered on or after 1 April 2017 – you will pay the standard rate (this is £190 for 2024 but is subject to change for 2025)
Electric vans
Most electric vans will move to the standard annual rate for light goods vehicles. Check the current rates for this vehicle. The current rate is £335 a year for most vans.
Electric motorcycles
Electric motorcycles and tricycles will move to the annual rate for the smallest engine size. This is currently £25 per year. Check the current rates for this vehicle.
Additional rate (expensive car supplement)
For new electric vehicles with a list price exceeding £40,000, you will now need to pay the expensive car supplement from the second tax payment onwards. This applies to vehicles registered on or after 1 April 2025.
Since April 2017, cars with a list price exceeding £40,000 pay an additional supplement as well as paying the standard rate, which means those who can afford the most expensive cars pay more than the standard rate imposed on other drivers.
The expensive car supplement is paid in addition to the standard rate for a period of five years from the start of the second vehicle licence but for a period of no longer than six years from when the vehicle was first registered.
More about the expensive car supplement may be found here.
Should you still consider owning an electric vehicle?
As these road tax changes indicate, a low emission vehicle is becoming more expensive to run when compared to a few years ago. The HB team are fans of EVs, as you may have read in our previous blogs. But as more people make the switch to electric vehicles, the amount of road tax is falling and we guess the government is now looking to make up the difference.
If you are considering making the switch to an EV, or deciding whether to keep your low emission fleet, here are some other considerations, focused on the annual payments the drivers of electric vehicles should be aware about:
- Electricity costs: Charging an electric car at home will increase your electricity consumption. The cost will depend on the efficiency of your vehicle, local electricity rates, and the number of miles you drive.
- Car insurance: Vehicle insurance is something all drivers must have before they get behind the wheel. The cost of insuring an electric car can vary depending on factors such as your driving history, the specific vehicle model, and the insurance provider.
- Maintenance: Electric cars generally have fewer moving parts and require less maintenance compared to traditional combustion engine vehicles. However, when things go wrong, they tend to go really wrong and we’re only just learning about battery life spans and the cost of replacement batteries.
How can we help you?
The HB team is always available to support your accountancy needs including supporting any decisions about the most tax efficient and cost effective way to manage your company vehicles and fleet.
If you would like to learn more about the services that we offer, discover how we can give you real confidence in the future of your business, or if you are a larger business that requires auditing, then contact us today. We’re accountants for business and we are here to help you grow efficiently.
The information contained above is for general guidance purposes only. Whilst every effort has been made to ensure the contents are accurate, please note that each individual has different circumstances and it is essential that you seek appropriate professional advice before you act on any of the information contained herein. HB Accountants can accept no liability for any error
Read Our Latest Blogs Below
- HB Accountants Podcast: Episode 3 Year End Tax Planning Tips for Individuals
Following the success of our previous episodes, HB Accountants is excited to announce Episode 3 of our podcast series: Year End Tax Planning Tips for Individuals. This installment is dedicated to helping individuals navigate the complexities of personal tax planning as the fisccal year draws to a close. - HB Accountants Podcast: Episode 2 Smart Tax Planning Tips for BusinessesWelcome back to the HB Accountants Podcast. After the success of our first episode, we are excited to bring you Episode Two, where we tackle a crucial topic for every business owner – tax planning.
- Working From Home tax relief – you can still claim for the Covid-years
During the lockdowns of 2020-2021, a number of people were asked to work from home. The Working From Home Rules on Tax Relief were relaxed to cover additional energy and other household costs encountered by working from home. The rules for working from home tax relief have evolved now that people are back to working … Continue reading - National Minimum Wage – What counts as working time?
A number of workers are not being paid the National Minimum Wage (NMW). Often, this isn’t intentional, it’s because the NMW is more than just a pay rate, it’s a calculation. The main reason why so many companies accidentally underpay their workers is because they do not know about the calculation. Here is the HB … Continue reading - No further Tax Increases: Spring Statement 2025
The UK Chancellor of the Exchequer, Rachel Reeves has delivered her second fiscal statement announcing her focus is on growth. In the run up to the event, the Chancellor stated that she ‘remains committed to one major fiscal event a year to give families and businesses stability and certainty on upcoming tax and spending changes … Continue reading - Last chance to check for gaps in your National Insurance to qualify for your full state pension
You only have until 5 April 2025 to check your National Insurance record to enable you to fill in any gaps in your NI contributions from 2006 to 2018. If you have a shortfall in your record you have a few days to 5 April 2025 to buy back missed years to qualify for a … Continue reading
