Our information to EVs and low emission car street tax modifications from 2025
- Vehicle Excise Duty (VED) will change for EVs and low emission vehicles in 2025
- EVs and low emission cars (hybrids) will have to pay VED or ‘road tax’
- Here’s our guide to the changes and other tax updates you need to know
One of the big benefits of electric vehicles – that helps keep running costs down – is they’re exempt from many taxes, including road tax.
However, that’s set to change next year, as zero-emission and low emission vehicles will have to start paying Vehicle Excise Duty (otherwise known as road tax) in the same way as internal combustion engine (ICE) vehicles do.
To make sure you don’t get caught out, here’s our guide for current and future EV owners – everything you need to know about road tax changes…
From 1 April 2025 zero-emission and low emission vehicles will have to start paying VED in the same way as internal combustion engine vehicles do
The ONS predicts VED input to the economy each year, and as half of all new vehicle sold in 2025 are expected to be electric, the government wants to start getting tax revenue from them to hit targets
Why are VED rates changing for EVs and low emission vehicles?
The Government announced changes to VED in its Spring Budget in April. It was set out as a way to ensure all drivers begin to pay a fairer tax contribution.
Chancellor Jeremy Hunt justified the decision with forecasts from the Office for Budget Responsibility that put half of all new vehicles sold in 2025 as electric, so the change ‘would therefore create a fairer motoring tax system’.
VED brought in £7.4 billion tax revenue for the Government in 2022/23 according to the House of Commons library. This is predicted to rise to £9.4billion by 2027/28.
When do the changes come in?
1 April 2025
How much VED will I have to pay?
This depends on when the low emission (hybrid and plug-in hybrid) or zero-emission car’s registered.
New electric and low emission cars registered on or after 1 April 2025:
For the first year these cars will pay just £10. This will go up to the current standard VED rate (that all other cars pay) of £190 from year two.
EVs and low emission cars registered between 1 April 2017 and 31 March 2025:
Will have to pay the full current VED rate of £190 from the get-go.
The standard rate of VED is subject to change for 2025, but no revision has been made.
Electric and low emission cars registered between 1 March 2001 and 31 March 2017:
Will move to the first band that has a VED value (as defined by the Department for Transport) which is currently £20.
Again, this rate is subject to change for 2025, but no revision has been given.
VED band rates for cars registered on or after 1st April 2017 – will now apply to EVs and low emission cars registered before 31 March 2025
How to know if your car is low emissions?
If you’re not driving a fully-electric (Battery Electric or BEV) but you car is low emissions, you might not be sure which VED band your motor falls into.
The easiest way to check is to look at the gov.uk website where the bands are set out, and then check the CO2 emissions for your car.
You can do this by using the Government’s CO2 emissions checker tool. You don’t have to have already bought the car; you can check new unregistered cars too.
The Ford Kuga is one of the best-selling plug-in hybrids in the UK and is ranked as low emissions by the government’s VED bands
0g/km applies to all zero emission EVs, while most plug-in hybrids (PHEVs) like the UK’s best-selling Ford Kuga PHEV will be in the second CO2 emissions band of 1 to 50g/km of CO2.
For example, the 2024 Ford Kuga emits 25g/km of CO2, so a new Kuga PHEVs registered on or after 1 April 2025 it will only have to pay £10 for year one.
The second tax payment onwards will be £190 (or whatever the 2026 rate is set at).
Ford Kuga PHEVs registered before 1 April 2025 will have to pay £190 from year one.
What about alternatively fuelled vehicles (AFVs)?
Alternative fuels are defined by the government as ‘fuel or power sources which serve, at least partly, as a substitute for fossil oil sources in the energy supply to transport’.
These include hydrogen, liquid or gaseous biofuels, synthetic fuels, compressed natural gas (CNG) and liquefied petroleum gas (LPG).
They offer a cleaner (and sometimes cheaper) substitute to petrol and diesel.
Up until this point AFVs received a £10 annual discount on VED, but this will be removed from 1 April 2025.
The rate you will pay for an AFV will depend on when the vehicle was first registered.
Registered before 1 April 2017: This rate will depend on the vehicle’s CO2 emissions (use the same govt tool to check).
Registered on or after 1 April 2017: You’ll pay the standard rate of VED (currently that £190 but it’s subject to change for 2025).
Are motorcycles and vans subject to changes?
From 1 April 2025 zero-emission and low emission vans will move into the same flat rate VED bracket as petrol and diesel vans, which is currently £290 a year.
Motorbikes and tricycles will be taxed on the annual rate for the smallest engine size – which is currently £22 a year. These can be checked on the vehicle tax rates page.
What other changes are happening? The Expensive Car Supplement
The Mercedes EQS is the flagship EV from the German brand and costs from over £112,000
From 1 April 2025, electric vehicles will no longer be exempt from the ‘Expensive Car Supplement’.
New petrol and diesel cars with a list price of more than £40,000 are subject to a £355 surcharge for the first five years of registration.
From April next year this will apply to EVs and low emission cars – you’ll have to pay the surcharge.
Are company car tax rates changing too?
With private EV sales stalling, but business and fleet sales surging ahead, company car tax breaks are very important.
Most businesses choose EVs because of the attractive Benefit-in-Kind rates for these models. And the good news is that these incentives will continue after April 2025, and won’t be hit in the same way as VED.
BiK rates for cars emitting 75g/km or less will increase by one per cent a year, starting in 2025-26.
