Introduction to EV Road Tax Changes
Electric vehicles (EVs) have enjoyed a significant tax advantage in the UK since their introduction, with most fully electric cars being exempt from Vehicle Excise Duty (VED), commonly known as road tax. However, this is set to change from April 2025, when new regulations will bring EVs into the standard road tax system.
This guide provides a comprehensive overview of the upcoming changes, how they will affect current and prospective EV owners, and what you need to know to prepare for these new costs.
Current Road Tax Situation for Electric Vehicles
As of 2024, fully electric vehicles are exempt from paying road tax in the UK. This exemption has been one of several incentives designed to encourage the adoption of zero-emission vehicles and support the government's environmental goals.
The current system means that EV owners save approximately £165 per year compared to owners of conventional petrol or diesel vehicles, which typically pay the standard rate of £165 annually (for vehicles registered after April 2017).
New EV Road Tax Rates from April 2025
From April 1, 2025, electric vehicles will no longer be exempt from road tax. The new system will apply different rates based on when the vehicle was registered:
For New EVs Registered from April 1, 2025:
- First year rate: £10
- Standard rate from second year onwards: £195 per year
For EVs Registered Between April 1, 2017 and March 31, 2025:
- Standard rate: £195 per year
For EVs Registered Before April 1, 2017:
- Annual rate: £20 per year
The Expensive Car Supplement
In addition to the standard rates, owners of more expensive electric vehicles will face an additional charge:
- Expensive Car Supplement: An additional £425 per year for vehicles with a list price over £40,000
- This supplement applies for five years, starting from the second year of registration
- For expensive EVs, the total annual tax will be £620 (£195 standard rate + £425 supplement) during these five years
This means that owners of premium electric vehicles will face a significant new annual cost that didn't exist before.
Comparison to Petrol and Diesel Vehicles
While the introduction of road tax for EVs removes one of their financial advantages, there are still some differences when compared to conventional vehicles:
First Year Rates (for vehicles registered from April 2025):
| Vehicle Type | First Year Rate |
|---|---|
| Electric Vehicles | £10 |
| Petrol/Diesel (1-50g/km CO2) | £10 |
| Petrol/Diesel (51-75g/km CO2) | £30 |
| Petrol/Diesel (76-90g/km CO2) | £130 |
| Petrol/Diesel (91-100g/km CO2) | £155 |
| Highest emitting vehicles (over 255g/km CO2) | Up to £5,490 |
Standard Rates (from second year onwards):
| Vehicle Type | Standard Rate |
|---|---|
| Electric Vehicles | £195 |
| Petrol/Diesel (registered after April 2017) | £195 |
| Hybrid vehicles | £195 (£10 discount removed) |
As the tables show, while EVs will now be subject to road tax, they still benefit from lower first-year rates compared to most petrol and diesel vehicles, especially those with higher emissions.
Impact on EV Owners
The introduction of road tax for electric vehicles will have varying impacts depending on the type of EV you own or plan to purchase:
For Current EV Owners:
- If your EV was registered between April 2017 and March 2025, you'll start paying £195 annually from April 2025
- If your EV was registered before April 2017, you'll pay a reduced rate of £20 annually
- If your EV cost over £40,000 when new and is less than five years old in April 2025, you'll also need to pay the expensive car supplement of £425 annually
For Prospective EV Buyers:
- If you purchase and register an EV before April 2025, you'll enjoy tax-free driving until April 2025, then pay £195 annually
- If you purchase an EV after April 2025, you'll pay £10 for the first year, then £195 annually thereafter
- If your new EV costs over £40,000, you'll also face the expensive car supplement for five years
For an owner of a standard EV registered in 2023, the change means a new annual cost of £195 from April 2025 onwards. For an owner of a premium EV costing over £40,000 registered in 2023, the annual cost from April 2025 will be £620 for the remaining years of the five-year period.
Why Are These Changes Being Introduced?
The government has cited several reasons for bringing electric vehicles into the road tax system:
- Revenue replacement: As more drivers switch to electric vehicles, the government faces a significant reduction in road tax revenue. These changes are estimated to raise over £1.5 billion by 2027-28.
- Fairness in road funding: The principle that all road users should contribute to the maintenance and development of the road network.
- Transition to a sustainable system: As the UK moves toward its target of ending the sale of new petrol and diesel cars by 2030, a new taxation system is needed that accounts for the growing proportion of electric vehicles.
Other Changes to Be Aware Of
In addition to the main road tax changes, there are other related developments to note:
- Removal of hybrid discount: The £10 annual discount for hybrid vehicles will be removed from April 2025.
- Company car tax: Benefit-in-kind rates for electric company cars will remain lower than for petrol and diesel alternatives, though they are gradually increasing.
- Electric vans and motorcycles: These will also lose their tax exemption from April 2025.
Preparing for the Changes
If you're an EV owner or considering purchasing an electric vehicle, here are some steps to prepare for the upcoming tax changes:
- Budget for the new costs: Factor in the annual road tax when planning your vehicle running costs from April 2025.
- Consider timing of purchases: If you're planning to buy an EV, registering it before April 2025 will give you tax-free driving until the changes come into effect.
- Evaluate vehicle price: If you're considering a premium EV, be aware of the £40,000 threshold that triggers the expensive car supplement.
- Stay informed: Keep up to date with any further announcements or adjustments to the planned changes.
If you're planning to buy an electric vehicle, doing so before April 2025 will give you several months of tax-free driving. Even for a standard EV, this represents a saving of £195 compared to buying after the changes take effect.
Conclusion
The introduction of road tax for electric vehicles from April 2025 marks a significant change in the UK's approach to vehicle taxation. While it removes one of the financial incentives for EV ownership, electric vehicles still offer other benefits, including lower running costs, reduced emissions, and in many cases, lower first-year tax rates compared to high-emission petrol and diesel alternatives.
For current and prospective EV owners, understanding these changes is essential for financial planning and making informed decisions about vehicle purchases. While the tax exemption is ending, the overall case for electric vehicles remains strong as the UK continues its transition to a greener transport system.
Use our car tax calculator to estimate how much you'll pay under the new system and compare costs between different vehicle types.