Experts have issued a major warning to drivers ahead of a crucial April start date, which will see millions pay car tax for the first time, which risks causing huge disruptions to Government plans.
From April 1, 2025, electric vehicle owners will face a significant change in payments as they start paying Vehicle Excise Duty for the first time.
This marks a major shift in how zero emission vehicles are taxed, with the National Franchised Dealership Association (NFDA) highlighting how this imminent change could cause broader concerns about the UK’s transition to electric vehicles.
Prospective EV buyers are now being advised to factor these new tax obligations into their purchasing decisions to avoid getting hit with huge cost hikes.
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Drivers of electric cars will have to pay Vehicle Excise Duty from April 1
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From April, electric cars registered between April 1, 2017, and March 31, 2025,will be charged the lowest VED rate at £10, but from the second tax payment onwards, they will be required to pay the standard rate of £195, the same amount paid by petrol and diesel car owners.
The introduction of new car tax obligations has greater implications for the industry, the association has warned.
It comes while pressure on the automotive industry to roll out more electric cars is set to intensify as the Zero Emission Vehicle (ZEV) mandate quota rises to 28 per cent for new cars and 16 per cent for new vans.
The NFDA has now expressed serious concerns about the lack of adequate Government support for the transition to zero emission vehicles.
Earlier this month, the organisation submitted a response to a Government consultation on proposals regarding the future of the ZEV mandate beyond 2030.
The group warned that the current measures to support demand for ZEVs are “inadequate”. The association stressed how dealers are fully committed to the transition but need better Government backing.
Members highlighted the vital role hybrids can play in bridging the gap between 2030 and 2035. The NFDA also noted the importance of distinguishing between cars and commercial vehicles, as trucks and vans require a different approach.
Sue Robinson, chief executive of the NFDA, said: “As the Government works towards its net-zero goals, electric vehicles will become increasingly common on UK roads. Those intending on purchasing an EV should consider visiting an NFDA Electric Vehicle Approved dealership.
“These dealers are certified experts in UK electric vehicle sales. The EVA scheme, backed by the Energy Saving Trust, offers EV-specific certification to dealerships. Anyone purchasing an EV should be aware that, starting in April 2025, EVs will be subject to Vehicle Excise Duty.
“A key focus of NFDA’s response is the urgent need for incentives, emphasising that stimulating consumer demand is crucial for driving market growth.”
The NFDA has outlined several key areas where enhanced Government support is needed to accelerate EV adoption. Direct fiscal incentives top the list of recommendations to stimulate consumer demand.
Infrastructure improvements are deemed essential for addressing range anxiety concerns followed by grid connection issues that must be resolved to ensure reliable charging networks nationwide. The association also called for public awareness campaigns to educate consumers about the benefits of electric vehicles.
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Robinson added that the Government must consider the differing needs of car and van buyers. As of January 2025, battery electric vehicles hold a market share of 21.3 per cent for new cars and 7.6 per cent for new vans.
The NFDA has been actively lobbying for the ZEV mandate, both before and after its implementation. Their efforts included hosting the Future of Roads Minister, Lilian Greenwood MP, at NFDA’s Parliamentary Dinner.
