This was to be achieved through an increase in Vehicle Excise Duty (VED) - also known as car tax, road tax or road fund licence - for EVs and certain hybrids, bringing them in line with existing rates for conventional internal combustion engine (ICE) models.
VED, sometimes referred to as "road tax" or “car tax”, has been used in the past to encourage the purchase of low-emission or zero-emission vehicles by offering lower rates for less polluting cars and higher rates for 'gas-guzzlers'. However, under the new plan, zero-emission cars were placed in the lowest tax rate, with a VED of £10 for the first year and £165 per year thereafter. Additionally, the exemption for EVs from the "expensive car supplement" were eliminated, meaning that any car with a list price of £40,000 or more would incur an additional £355 charge for five years beginning in the second year of ownership, after which the rate would return to the standard rate. This could result in an annual cost of around £520 for some EV owners.
The changes to VED for zero-emission cars were backdated to vehicles registered after April 1, 2017, meaning that individuals who were paying no VED would now be required to pay the standard rate of £165 per year. Low- and zero-emission cars registered between March 1, 2001 and March 30, 2017 and currently in Band A were moved to Band B and would have to pay £20 per year, making these vehicles cheaper to operate than those registered after the 2017 cut-off. Zero-emission vans were also subject to the £290 rate for ICE light goods vehicles, while zero-emission motorcycles and trikes were moved to the lowest band, currently at £22. Cars classified as "alternative fuels," which received a small discount on the standard rate, were also moved to the £165 rate.
Find out about the upcoming Pay Per Mile tax changes
For company car drivers, the Benefit In Kind (BIK) rates, for cars emitting less than 75g/km of CO2, only increased by 1% per year starting in 2025-26, so the significant tax savings for driving an electric vehicle, like the Ford Mustang Mach-E or the Ford E-Transit remained in place. The fixed benefit rates for vans and other commercial vehicles, as well as their fuel, increased in line with inflation in April 2023, based on the Consumer Price Index (CPI).
Of course, these changes to vehicle tax don’t outweigh the many benefits to owning and driving an electric or hybrid vehicle. Savings on fuel, maintenance and general running costs, plus improved performance, continue to be kinder on your wallet and the environment. And, with more and more electric charge points being added to the various networks across the United Kingdom, most drivers’ worries about moving to an all-electric vehicle are alleviated.
So, if you’ve been considering moving into an all-electric or hybrid new Ford car, click the button below to see the range of electrified Ford vehicles we have to offer.
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