What is VED?
Electric vehicles have always been the ideal option for those wanting to help the environment, but also reduce their driving costs - one of these is the fact EVs have always been exempt from vehicle excise duty (VED), commonly referred to as road tax or car tax. However, in last year’s Autumn Statement, it was announced this would come to an end in 2025.
VED, or road tax, is a legal requirement to allow you to drive your car and park it on a public road. The price you pay usually revolves around the emissions that your car produces. However, over the years, cars have become more efficient and cleaner so the government has had to alter tac bands to ensure that revenue does not fall too much.
When will EVs have to start paying VED?
If you own or have recently purchased an EV, you need to know that as of April 2025 you will need to start paying car tax. Of course, all electric vehicles were exempt because of their lack of emissions, but this is due to change once the new tax year begins. Your car tax goes towards maintaining and improving the infrastructure of the roads, like fixing potholes or creating new road layouts.
How much VED will I need to pay on a new electric car?
If you buy a brand-new EV on or after April 1st 2025, these models will still sit at the lowest first-year VED rate. This currently applies to vehicles with CO2 emissions of 1-50g/km, and amounts to just £10 a year. Although some EV car owners have not had to pay tax, you had to ensure that your car was still taxed by registering it.
What about VED for used electric cars?
You’ll notice the price of VED increases more once this year is over. That’s because the system will move to tax electric vehicles in the same way that petrol and diesel vehicles do currently, with a flat rate of £165 a year. This applies to all EVs registered after April 1, 2017.
For EVs with a list price of more than £40,000 when new, these will be subject to an ‘Expensive Car Supplement’ in the same way as petrol and diesels do. This is an additional £310 charge (on top of the £165 rate), that is paid for the first five years after initial registration, up to when the vehicle is six years old.
Electric cars registered up until the end of March 2017 will be charged in a slightly different way, as are other petrol and diesel models of this age, which was taxation based purely on emissions. So EVs will move from VED band A to B, and will pay £20 a year. This is still significantly cheaper than for those who own an ICE vehicle!
What about electric vans and motorbikes?
Electric commercial vehicles and motorbikes are not exempt from these charges either, unfortunately.
Zero-emission vans, from April 2025, will move into the same flat rate that petrol and diesel vans currently pay, which is currently £290 a year.
As for motorbikes, these will be taxed as if they’ve got the smallest engine size, which is currently £22 a year.
Is company car tax changing for electric cars?
Many have chosen electric cars as company cars because of the attractive Benefit-in-Kind rates for these models.
These incentives will continue after April 2025 too, with these BiK rates for cars emitting 75g/km or less only increasing by one per cent a year, starting in 2025-26.
These changes are being made as a growing number of people are choosing electric cars (almost a third of new cars registered in December were EVs), so there’s an increasing funding blackhole being caused by EVs - this is being addressed here to plug the finances. The government’s official line is that it’s being done to make “our motoring tax system fairer”.
Find your next electric vehicle with Swansway
Electric vehicles still produce a lot less in the way of emissions than an ICE vehicle would - but having everyone pay a certain amount of money not only makes it fair, but serves as an incentive to switch to EVs so you don’t have much in the way of tax to pay. Browse through our electric vehicles today to find the perfect car to suit your needs. If you’re still concerned about the switch to electric, take a look at our EV guides on YouTube to understand more about the myths and facts of EV ownership. If you’re unsure what you're looking for or would like more information about one of the vehicles you see on our website, don’t hesitate to get in touch with one of our team and we’d be happy to help you.