Upcoming Changes to Vehicle Excise Duty (VED)
Drivers should take note of significant changes to Vehicle Excise Duty (VED) that will come into effect starting in April 2025. These changes will lead to increased tax rates for numerous motorists, including those with electric and low-emission vehicles.
Key Changes to VED in April 2025
New Tax Rates for Electric and Low-Emission Vehicles
From April 1, 2025, the taxation rules will be updated for electric, zero-emission, and low-emission vehicles. Until now, these vehicles had no tax charge; however, a payable fee will now be applicable. The amount due will depend on the type of vehicle and when it was registered.
Elimination of Band A
Under the current VED system, there is a Band A with a tax rate of £0. This band is being removed, meaning all vehicles that were previously in Band A will move to the first band where a fee will apply. It is important to plan for this change if you own such a vehicle.
For further details on these changes, you can refer to the comprehensive information available on the GOV.UK website.
How VED Will Affect Different Vehicles
1. Electric, Zero, or Low-Emission Cars Registered on or After April 1, 2025
- First-Year Rate: £10
- Subsequent Annual Rate: £195
2. Electric, Zero, or Low-Emission Cars Registered Between April 1, 2017, and March 31, 2025
- Standard Annual Rate: £195
3. Electric, Zero, or Low-Emission Cars Registered Between March 1, 2001, and March 31, 2017
- First-Year Band Rate: £20
4. Hybrid and Alternative Fuel Vehicles (AFVs)
- Removal of Discount: The previous annual discount of £10 for hybrid and AFVs will be taken away.
- Rates Based on Registration Date:
- Registered Before April 1, 2017: Tax will depend on the vehicle’s CO2 emissions.
- Registered On or After April 1, 2017: Standard annual rate will be £195.
5. Electric Vans
Electric vans will generally switch to the standard annual rate for light goods vehicles. It’s advisable to review the current rates that apply to these vehicles.
6. Electric Motorcycles
Electric motorcycles and tricycles will also see tax changes, transitioning to the annual rate for the smallest engine size. Again, you should check the current rates for these vehicles.
7. Additional Rate for Expensive Cars
For new electric and zero-emission vehicles registered on or after April 1, 2025, with a list price exceeding £40,000:
- Initial Rate: Will pay the standard rate (£195)
- Additional Charge: An expensive car supplement applies for the first five years starting from the second license.
Conclusion
The changes to Vehicle Excise Duty (VED) starting April 2025 will bring new tax obligations for many vehicle owners, particularly those using electric and low-emission vehicles. Everyone should review how these new rates will impact their wallets, whether they own a car, van, or motorcycle. Make sure to stay informed and prepare for these changes to ensure compliance and budget accordingly. For more detailed information, visit the official government resources.
