Electric car road tax and company car tax payable from 2025

The Chancellor, Jeremy Hunt has announced in today’s Autumn Statement that electric car road tax (vehicle excise duty – VED) will be payable from April 2025. Total Car Check’s free basic check provides current VED costs for vehicles.

VED changes impacting on electric vehicles (EVs)

The key electric car road tax measures and those impacting on vans and motorcycles:

  • Zero-emission cars registered from 1 April 2025 will be liable to pay the lowest rate of VED. This is currently set at £10 per year and payable where a vehicle’s CO2 emissions are between 1 and 50g/km.
    • In the second year of registration a move to the ‘standard rate’ will apply.  This is currently set at £165 per year.
  • Zero-emission cars registered between 1 April 2017 and 31 March 2025 will pay the standard annual rate from 1 April 2025.  So if you’re already running an electric car you will likely pay VED of at least £165 per year from 2025.
  • Zero and low-emission cars that were first registered between 1 March 2001 and 30 March 2017, and are within VED Band A, will move to the Band B rate, which is currently £20 per year.
  • Rates for hybrid electric vehicles will also be equalised, meaning hybrid car keepers will no longer receive the current £10 annual VED discount.
  • Electric cars will also no longer be exempt from paying an additional supplement of £355 per year if they were purchased at a list price of £40,000 or more.  This is currently payable in the second to sixth years of registration.
  • Zero-emission vans will become subject to the rate for petrol and diesel light goods vehicles, presently £290 a year for most vans.
  • Zero-emission motorcycles and tricycles will move to the rate for the smallest engine size, presently £22 per year.

Benefit-in-Kind (BiK) Company Car Tax rates to increase

The Treasury also announced it would set rates for Benefit-in-Kind (BiK) Company Car Tax until April 2028. Percentages for electric and ultra-low emission cars (those emitting less than 75g/km of CO2) will increase by one percentage point in 2025-26, 2026-27 and 2027-28. Then up to a maximum appropriate percentage of five per cent for electric cars and 21 per cent for ultra-low emission cars.

BiK rates for all other vehicle bands will be increased by one percentage point for 2025-26 up to a maximum appropriate percentage of 37 per cent, and will then be fixed in 2026-27 and 2027-28.

Impact on Government tax receipts

The Government’s Autumn Statement report suggests the changes will generate £515 million in 2025 which is expected to grow to £1.6 billion by 2027.  Based on the policies set out today the Government is not currently considering implementing a new road charging scheme as our Blog covered earlier this year.

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