New zero emission cars registered on or after April 1, 2025, will be liable to pay the lowest first year rate of VED (which applies to vehicles with CO2 emissions 1 to 50g/km) currently £10 a year.
From the second year of registration onwards, they will move to the standard rate, currently £165 a year. Zero emission cars first registered between April 1, 2017, and March 31, 2025, will also pay the standard rate.
The Expensive Car Supplement exemption for EVs is due to end in 2025. New zero emission cars registered on or after April 1, 2025 will therefore be liable for the expensive car supplement, says the Treasury.
The Expensive Car Supplement currently applies to cars with a list price exceeding £40,000 for five years. Zero and low emission cars first registered between March 1, 2001, and March 30, 2017, currently in band A will move to the band B rate, currently £20 a year.
Zero emission vans will move to the rate for petrol and diesel light goods vehicles, currently £290 a year for most vans.
Zero emission motorcycles and tricycles will move to the rate for the smallest engine size, currently £22 a year. Rates for alternative fuel vehicles and hybrids will also be equalised
Fuel duty and VED combined raise about £35 billion for Government coffers but, according to the Office for Budget Responsibility (OBR) the growing share of electric cars threatened to cut motoring tax revenues by £2.1bn by 2026-27.
By introducing VED on EVs, the Government estimates that it will be worth an additional £515 million in 2025/26, £985m in 2026/27 and almost £1.6bn in 2027/28.