From April 2025, electric vehicle (EV) owners in the UK will be required to pay Vehicle Excise Duty (VED), commonly known as road tax. This marks the end of the government’s longstanding exemption for EVs, which was introduced to encourage the adoption of zero-emission vehicles.
If you own an EV or are considering buying one, it's crucial to understand how these tax changes will affect you. This guide will break down the upcoming changes and what they mean for both current and future EV drivers.
What Are the New VED Rules for EVs?
Currently, pure battery electric vehicles (BEVs) are exempt from paying VED. However, starting from 1st April 2025, all EVs will be subject to the new VED charges. Here’s a breakdown of how the new rules will work:
1. New EVs Registered After 1st April 2025
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Electric vehicles registered after the 1st April will no longer qualify for the VED exemption.
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They will be subject to the same first-year rate as petrol and diesel cars, which is based on CO₂ emissions. This means:
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The first-year rate will be lower costing £10
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After the first year, EVs will be moved to the standard rate of £195 per year.
2. Existing EVs Registered Before 1st April 2017
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EVs first registered before April 2017 will move to the lowest VED band.
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This means owners of electric vehicles registered before April 2017 will be required to pay £20 per year.
3. EVs Registered Between April 2017 and March 2025
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Electric vehicles registered between April 2017-2025 will transition to the £195 annual standard rate from April 2025.
4. Premium EVs Over £40,000
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The Expensive Car Supplement currently applies to petrol and diesel cars costing more than £40,000.
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From April 2025, this will also apply to electric vehicles.
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EVs with a list price over £40,000 will be subject to an additional £425 per year for five years, on top of the standard £195 VED rate.
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This means that premium EVs will be taxed up to £620 for five years from the second year onward.
Why Is the Government Introducing EV Road Tax?
The UK government’s goal is to ensure fairness in the tax system as EV adoption grows. Until now, EV drivers have benefited from lower running costs, including exemption from road tax. However, as more people switch to electric, the Treasury is set to lose billions in tax revenue from declining petrol and diesel car sales.
How Will These Changes Affect EV Owners?
Higher Costs for Premium EV Owners
If your EV costs more than £40,000, you’ll be hit the hardest, as you’ll need to pay the Expensive Car Supplement for five years, costing a total road tax charge of £620 per year during this period.
EVs Will Still Be Cheaper to Run Than Petrol/Diesel Cars
Even with the introduction of VED, EVs will still be more cost-effective in terms of fuel savings, maintenance, and congestion charge exemptions.
Potential Impact on Second-Hand EV Prices
As second-hand EVs lose their tax-free status, this could slightly affect their resale value. However, EVs still remain attractive due to lower running costs.
What Should EV Owners Do?
1. Check Your EV’s List Price
If your EV costs more than £40,000, be prepared for the premium rate charge.
2. Consider Buying & Taxing Before April 2025
If you’re planning to buy an EV or you’re due to re-tax your vehicle, doing so before the tax changes take effect could mean enjoying a longer period of tax exemption.
3. Explore Other Incentives
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EVs will still be cheaper to fuel than petrol or diesel cars, especially when charging from home with a Type 2 Charging Cable or a 3-Pin UK Plug Charging Cable.
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Local incentives such as free parking or congestion charge exemptions remain in place.
Where to Find More Information
For further details on the upcoming VED changes, visit the official UK government website:
Vehicle Tax for Electric and Low Emissions Vehicles.
The 2025 EV road tax changes mark the end of an era for tax-free electric driving in the UK. While these new charges will increase costs for EV owners, electric vehicles still offer significant long-term savings on fuel and maintenance costs.
If you’re considering switching to an EV, it’s worth factoring these new costs into your decision, however, the shift to electric vehicles still remains a smart and sustainable choice.
