New VED Rate Affecting Electric Cars From April 2025 As Popularity Rises

Car buyers who opt for either a new or used electric vehicle are set to pay Vehicle Excise Duty (VED) for the first time from 1st April 2025, in line with the current tax system in place for petrol and diesel vehicles.

The new VED rates, which also affects low emission cars, vans and motorcycles, has been created to make tax contributions fairer amongst all UK drivers. Until now, EV drivers haven’t been required to pay VED at all, while drivers of hybrid vehicles have received a discounted rate.

The previous government announced in the Autumn Statement 2022 that they intended to use the new VED system in 2025 to support drivers transitioning to electric vehicles, with incentives including reduced rates for lower emission vehicles and company car tax rates. Currently, no plans have been announced to change the proposed VED rates for electric vehicles ahead of next year’s introduction.

Electric and low emission cars which are registered from 1st April 2025 will be paying the lowest rate of vehicle tax for the first year under the new system, before moving onto the standard rate the following year, which is currently £190, however this is subject to change. Cars registered between 1st April 2017 and 31st March 2025 will move straight onto the standard rate at the vehicle’s VED renewal under the new plans, while drivers of hybrid and alternatively fuelled vehicles are set to lose their £10 annual discount.

Popularity for electric vehicles in the UK is increasing each year, particularly for used car dealers, with second-hand EVs seeing a recent surge. A recent report by the Society of Motor Manufacturers and Traders (SMMT) highlighted that more than 46,000 drivers switched to a used electric vehicle in the period from April to June this year, which marked nearly a 53% increase.

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