1. Home
  2. Guides
  3. 2023 Electric Car Tax rates and VED bands


2023 Electric Car Tax rates and VED bands

Sarah Tooze heycar honestjohn.co.uk

Written By Sarah Tooze

Hyundai Kona Electric (2019-2023) Review

How much is my electric car tax? Will I have to pay car tax on an electric vehicle? 

Whether you already own an EV or are thinking of buying one, what you pay in car tax is often a key reason to run an electric car.

At the moment, electric car owners pay nothing for car tax but that will change in 2025 when millions of EV drivers will be hit with a new tax. 

From 1 April 2025, all electric car owners will be required to pay Band B VED, with the Band A rate of zero effectively removed. 

Under 2023-2024 car tax rates, that means an annual cost of £10 in the first year and £180 in subsequent years. Electric car drivers who own a car with a list price of £40,000 or more will also pay the £370 premium car tax rate, which will take their yearly VED rate to £550 after the first year.

The new electric car tax rate will apply to cars first registered on 1 April 2017, which means it will be backdated to include millions of used EVs in the UK. 

That said, the new electric car tax rules won't affect EV drivers for some time, which means you won't have to pay a penny until the new VED rules are enforced on 1 April 2025.

Nissan Leaf charging

EVs registered from 1 April 2020 onwards

Under the current rules, electric vehicles still benefit from the zero rate of car tax as well as the exemption from the £40,000 premium car tax, so if you own or are looking to buy a pure electric vehicle this is a significant bonus.

However the planned change for 1 April 2025 will see electric cars attracting VED in the same way as cars fuelled by petrol, diesel or hybrid. We won't know the exact rates until then, but with the Government expected to encourage buyers to choose EVs over the alternatives, it is likely that the rate will be close to, if not below, the current flat rate. For 2023-2024 this is £180.

Another important consideration is that the £40,000 premium car tax exemption for EVs will also come to an end in April 2025. Under the 2023-2024 VED rates this means owners will pay an extra £370 in years two through to six after the vehicle is registered if the car cost £40,000 or more including options when it was new.

That means you could purchase a used EV today and pay nothing in VED, but in April 2025 attract both the flat rate and the additional premium. For example, an EV registered in April 2022 worth more than £40,000 would pay the additional premium from 2025 through to 2028 - which could have a significant impact on running costs.

Car Tax (VED) rates for electric cars registered from 1 April 2017

The below rates are for the 2022-2023 tax year

CO2 emissions

  • 0 g/km

First Year rate

  • £0

Standard rate

  • £0

First tax payment when an EV is new

This rate is based on a vehicle's CO2 emissions when it is first registered, and as pure electric vehicles have no tailpipe emissions that means they attract the zero rate under the current rules.

Electric cars registered between 2001 and 2017

Electric cars are a more common sight in showrooms and on driveways today, but EVs have been around for many years now - Nissan's Leaf was first introduced in 2011.

Under the current VED rules, vehicles registered between 2001 and 2017 pay the zero rate if their emissions are below 100 g/km - which means all pure electric vehicles remain VED-free.

Car Tax for electric cars registered between March 1 2001 and 31 March 2017

The below rates are for the 2023-2024 tax year

Vehicle Excise Duty Band

  • A

CO2 emissions

  • Up to 100

Standard rate

  • £0

Electric cars registered before 2001

Although electric cars have been around almost as long as petrol and diesel cars, before 2010 they were very much in the minority and not mass-produced. That means you will struggle to find a car from before 2001 with an electric powertrain.

However, the current boom in electric vehicles has also made EV conversions much more popular. Taking an older car, removing its petrol or diesel powertrain and installing battery packs and an electric motor has meant older cars getting a new lease of life.

The current VED rules for pre-2001 vehicles is purely based on engine size, but with an EV conversion you can benefit from zero car tax until April 2025.

Will the Government introduce car tax for electric cars?

Yes, most electric cars in the UK will pay car tax VED from 1 April 2025.

The main reason for this is the Government’s 2030 ban on the sale of new petrol and diesel cars and its legal commitment to reach net zero carbon emission by 2050, which means that more and more motorists will be switching to electric cars - and as they switch there will be a decline in motoring tax revenues for the Treasury. 

Should electric car owners pay car tax? 

In 2021, we consulted more than 10,000 drivers on what a new car tax system should look like that would be ‘fairer for all'

About a fifth (10%) were in favour of a pay-per-mile system of car charging being introduced. 

More than a quarter (28%) said a flat-rate of vehicle tax should be introduced meaning petrol, diesel, EV and hybrid car owners would pay the same amount. 

An increase in fuel duty was supported by 16%, while car tolls emerged as the least popular option - favoured by just eight per cent.

The Transport Select Committee has said that a new charging mechanism should be "revenue neutral with most motorists paying the same or less than they do currently”.

Your electric car tax questions answered

Electric cars provide lower fuel costs and free car tax VED and cheaper car insurance. However, free VED car tax will end on 1 April 2025.

Electric cars currently qualify for free car tax. You still need to obtain car tax when you buy an electric vehicle and renew it every 12 months but you will pay nothing for this process. Free VED for electric cars will end in 2025 and they will be charged at the standard road tax rate.

From 1 April 2025, the Government will introduce vehicle excise duty (VED) to electric cars for the first time. The most will plug the £35 billion ‘fiscal black hole’ that is predicted if EVs are allowed to have free VED until 2030.