One million cars will be exempt from Vehicle Excise Duty (VED) charges set to strike drivers this spring.
VED rates will rise for all petrol and diesel owners from April 1 in line with Retail Price Index (RPI) inflation.
However, electric car owners will get away without paying a penny due to rules outlined by officials. EVs are still completely exempt from paying VED in what was a major incentive to make the transition to the new machines.
The policy means those with the keys to electric models are set to save hundreds of pounds per year.
Earlier this week, the Society of Motor Manufacturers and Traders (SMMT) confirmed that electric vehicle ownership had just passed the one million milestone.
GOV.UK said: “Some types of vehicle are ‘exempt’ from vehicle tax. This means that you do not need to pay for the vehicle tax.
“To be exempt, the electricity must come from any of the following: An external source, such as a private or public chargepoint, an electric storage battery not connected to any source of power when the vehicle is moving, hydrogen fuel cells. You must pay vehicle tax if your vehicle is hybrid electric.”
Despite not needing to pay to use the roads, electric car owners must make sure they still tax their vehicle. Failure to not properly tax a vehicle can result in motorists being slapped with an £80 fine.
GOV.UK said: “Some types of vehicle are ‘exempt’ from vehicle tax. This means that you do not need to pay for the vehicle tax. To be exempt, the electricity must come from any of the following:
- an external source, such as a private or public chargepoint
- an electric storage battery not connected to any source of power when the vehicle is moving
- hydrogen fuel cells.
“You must pay vehicle tax if your vehicle is hybrid electric.”
Motorists who fail to pay the charge could be prosecuted and fees could soar to a whopping £1,000. However, electric car owners will only be exempt from paying tax fees for another year.
HM Revenue and Customs (HMRC) has confirmed owners of EVs will be subject to VED rates from April 2025.
Although costs are expected to be minimal, it will be the first time fully electric models are charged VED fees the same as petrol and diesel cars.
According to HMRC, the new rule will “equalise” VED treatment of all zero-emission and internal combustion models.
HMRC added: “Zero emission cars first registered on or after April 1, 2017, will be liable to pay the lowest first year rate of VED which currently applies to vehicles with CO2 emissions one to 50g/km. From the second year of registration onwards, zero emission cars will move to the standard annual rate.
“The Expensive Car Supplement exemption for EVs is due to end in 2025. New zero emission cars registered on or after April 1, 2025, will be liable to pay the expensive car supplement where eligible (currently those with a list price of or exceeding £40,000 are liable).
“This measure effectively removes Band A under the graduated VED system (for cars registered on or after 01/03/01 and before 01/04/17 with a CO2 emissions).
“As the Band A rate is currently £0, these vehicles will be required to move to the first band where a rate becomes payable – in this case Band B.”
