Budget Moves Car Tax Up For Electric Cars

2nd November 2024

Electric cars first registered on or after 1 April 2025: will pay the lowest rate of tax (first year rate), currently £10.

From the second year on, the standard rate kicks in and owners will need to pay £190 a year - the same rate petrol and diesel owners pay today (if they have a car first registered after 1 April 2017).

This measure was announced at Autumn Budget 2024.

Vehicle Excise Duty is a tax on vehicle ownership, and rates depend on the vehicle type and first registration date. Vehicle Excise Duty rates have increased in line with inflation since 2010.

From 1 April 2025, zero-emission vehicles will be subject to Vehicle Excise Duty. Further information about how Vehicle Excise Duty will apply to zero emission vehicles can be found in the tax information and impact note titled ‘Introduction of Vehicle Excise Duty for zero emission cars, vans and motorcycles from 2025'.

From the second year of registration onwards, zero-emission cars will move to the standard annual rate.

Owners of fully electric vehicles, who currently pay a low Benefit-in-Kind (BiK) tax rate of 2%, will have to increase payments to 5% by 2027/28, which will increase again by 2% each year until 29/30.

The hybrid vehicle tax structure is changing significantly. Rates will be solely based on CO2 emissions rather than the existing consideration of zero-emission mileage.

This means vehicles emitting between one and 50 grams of CO2 per kilometre will see their rates rise to 18% in 2028/29 and 19% in 2029/30. Rates for all other vehicle bands will increase by one percentage point annually during these years, with maximum rates reaching 38% and 39%.