The government has provided further details of VED changes to apply from April 2025:
“This measure will equalise the Vehicle Excise Duty (VED) treatment of all zero emission and internal combustion engine (ICE) vehicles from April 2025. This change will apply to both new and existing alternatively fuelled vehicles (AFVs).
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).
This measure effectively removes Band A under the graduated VED system (for cars registered on or after 01/03/01 and before 01/04/17 with a CO2 emissions). As the Band A rate is currently £0, these vehicles will be required to move to the first band where a rate becomes payable – in this case Band B.
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.”
In statutory terms, para. 20G of Sch. 2 to the Vehicle Excise & Registration Act (VERA) 1994 exempts electric vehicles from the requirement to pay Vehicle Excise Duty:
“This legislation will be amended so that the electrically propelled vehicle exemption no longer applies to cars, vans and motorcycles. The exemption for cars with low CO2 emissions will also be omitted. Schedule 1 will be amended so that electric cars, vans and motorcycles are liable to pay the same rates as petrol and diesel vehicles. Schedule 1 will also be amended so that new electric cars will be eligible to pay the higher rate of duty, commonly known as the expensive car supplement.”