The exact date owners of electric, zero or low emission cars have to start paying tax on their vehicles has been confirmed by the DVLA and it applies to both new and existing cars
Big changes to the rules surrounding car tax are being introduced in a matter of weeks and it means a huge increase for owners of electric cars.
As well as the environmental and performance advantages of electric cars, one of the big incentives to move away from diesel and petrol cars was that they are cheaper to run. Electricity costs less than fuel and the cars’ design means that they require less maintenance.
Another financial advantage of running a low emission vehicle is that they are exempt from tax. However that is about to change and it’s happening in just a matter of weeks. Former Chancellor Jeremy Hunt announced in the 2022 Autumn statement that from 2025 electric cars would have to start paying tax.
The DVLA has now confirmed exactly when that will be, who is affected and how much motorists will have to part with. “From 1 April 2025, registered keepers of electric, zero or low emission cars, vans and motorcycles will need to pay vehicle tax in the same way as registered keepers of petrol and diesel vehicles. This change will apply to both new and existing vehicles,” it said.
Currently owners of electric cars are in band A, which is set at £0. This is being completely removed from the system and vehicles in this category will move to the first band. Electric, zero or low emission cars registered between 1 March 2001 and 31 March 2017 will move to the first band that has a vehicle excise duty (VED) value. This will be £20.
Electric cars registered between 1 April 2017 and 31 March 2025 will pay the standard rate of £195. Electric cars registered on or after 1 April 2025 will pay the lower first rate of vehicle tax set at £10 from 1 April. From the second payment onwards they will switch to the standard rate of £195.
When it comes to Hybrid and alternatively fuelled vehicles (AFVs), the £10 annual discount is being removed. The rate these owners will now pay depends on when their vehicle was first registered. For those registered before 1 April 2017 it depends on the vehicle’s CO2 emissions – current rates can be checked here. Owners of vehicles registered on or after 1 April 2017 will pay the standard rate of £195.
If you’re an owner of an electric or zero emission car with a list price that exceeds £40,000, you’ll have to pay the standard rate and an additional rate, also known as the expensive car supplement for the first five years from the start of the second licence. This is an extra £410 per year.
However there is a way to squeeze another year of free tax out of your car. Money Saving Expert Martin Lewis has shared his trick for getting around the hikes. He has urged drivers to re-tax their electric car in March if it was first registered on or after April 1, 2017. He says it can be done anytime before April 1, 2025, when the changes come in, although March would maximise savings.
Renewing in March means you push the deadline back to March 2026, when the new rates will apply. You can utilise this hack no matter when your electric tax expires using the car’s registration number and reference number on your V5C vehicle logbook.
Do the new electric vehicle tax rules affect you? If so, tell us what you think of the changes in the comments below.
