Finance Act 2023 (c. 1)

Taxation of vehicles U.K.

10 Removal of VED exemption for electrically propelled vehicles etc U.K.

(1) The Vehicle Excise and Registration Act 1994 is amended as follows.

(2) In Schedule 2 (exempt vehicles), in paragraph 20G (electrically propelled vehicles)—

(a) in sub-paragraph (2)—

(i) before paragraph (a) insert—

“(za) it is a light passenger vehicle (within the meaning of paragraph 1A(2) or 1GA(2) of Schedule 1),

(zb) it is a light goods vehicle (within the meaning of paragraph 1H(2) of that Schedule), or

(zc) it is a motorcycle (within the meaning of paragraph 2(3) of that Schedule).”, and

(ii) omit paragraphs (a) and (b), and

(b) omit sub-paragraph (3).

(3) In that Schedule omit paragraph 25 (light passenger vehicles with low CO₂ emissions) and the italic heading before it.

(4) In Schedule 1 (annual rates of duty)—

(a) omit paragraph 1GB (exemption from paying duty on first vehicle licence for certain vehicles) and the italic heading before it,

(b) in paragraph 1GE(1) (higher rates of duty for vehicles with a price exceeding £40,000) for paragraph (c) substitute—

“(c) either—

(i) the vehicle was so registered on or after 1 April 2025, or

(ii) it was so registered before that date and its applicable CO₂ emissions figure exceeds 0g/km.”, and

(c) in paragraph 2 (motorcycles)—

(i) in sub-paragraph (1)(a), after “centimetres” insert “or if the vehicle is electrically propelled”, and

(ii) in sub-paragraph (3), in the definition of “motorcycle”, after “vehicle” insert “of a description specified in regulations made by the Secretary of State”.

(5) In consequence of the amendments made by subsections (2) to (4), in Schedule 1—

(a) in paragraph 1 (rates where no other rate specified)—

(i) in sub-paragraph (2), after “case of” insert “an electrically propelled vehicle or”, and

(ii) in sub-paragraph (2A), after “case of” insert “an electrically propelled vehicle or”,

(b) in paragraph 1B (light passenger vehicles registered before 1 April 2017), in the Table, in column (1)—

(i) after “Exceeding” insert “, or, in the first row, equal to or exceeding”, and

(ii) for “100” substitute “0”,

(c) in paragraph 1GC (light passenger vehicles registered on or after 1 April 2017)—

(i) in Table 1, in column (1), after “Exceeding” insert “, or, in the first row, equal to or exceeding”, and

(ii) in Table 2, in column (1), after “Exceeding” insert “, or, in the first row, equal to or exceeding”,

(d) in paragraph 1J (annual rate of duty for light goods vehicles)—

(i) in paragraph (a), after “van” insert “or a pre-2011 electric van”, and

(ii) in paragraph (b), after “van” insert “or a pre-2011 electric van”, and

(e) after paragraph 1M insert—

“1N For the purposes of paragraph 1J, a vehicle to which this Part of this Schedule applies is a “pre-2011 electric van” if—

(a) the vehicle is first registered, under this Act or under the law of a country or territory outside the United Kingdom, on or after 1 March 2003 and before 1 January 2011, and

(b) the vehicle is an electrically propelled vehicle.”

(6) The Graduated Vehicle Excise Duty (Prescribed Types of Fuel) Regulations 2001 (S.I. 2001/93) are revoked.

(7) The amendments and revocation made by this section have effect in relation to licences taken out on or after 1 April 2025.