EV’s vehicle excise duty exemption to end in April

The government has confirmed it will introduce vehicle excise duty (VED) charges for electric vehicles (EVs) from 1 April 2025, ending their longstanding tax exemption. For many years the reduction in revenue from vehicle tax as more electric vehicles hit the roads was cited as the main reason for the need for some kind of road charging system.

The move, first announced by the Conservative government in 2022 and reaffirmed in Labour’s 2024 Autumn Budget, will bring EV taxation in line with petrol and diesel vehicles.

From April 2025, new EVs registered on or after that date will incur a first-year tax rate of £10 before moving to the standard annual rate of £195 from the second year onwards.

Existing EVs registered between 1 April 2017 and 31 March 2025 will automatically transition to the £195 standard annual rate.

Older EVs registered between 1 March 2001 and 31 March 2017 will move into the first VED band with a payable rate, resulting in an annual tax of £20.

The changes will also affect hybrid and alternative fuel vehicles, with the government removing the £10 annual discount for these vehicles.

New electric cars priced over £40,000 will also be subject to the Expensive Car Supplement, which will add an additional charge of £425 per year for the first five years following the first standard rate payment.

The measure is expected to affect a significant number of new electric models, particularly those in the mid-range and premium segments.

HM Revenue and Customs says the changes are intended to ensure a “fairer tax contribution” from all drivers, regardless of vehicle type.

The government argues that as EV adoption increases, taxation policies must evolve to maintain public revenue streams.