Electric cars in the UK have been free from road tax (Vehicle Excise Duty or VED) for years. This was to encourage more people to buy cleaner, greener vehicles. But starting from 1 April 2025, this will change. Electric cars will no longer be exempt from paying road tax.
In this blog, we’ll explain what this means, why the change is happening, and how it might affect you if you own or are thinking about buying an electric car.
VED is a tax you pay to drive or park your vehicle on public roads in the UK. It's usually paid once a year. The amount of tax is based on several factors:
Your car’s carbon dioxide (CO2) emissions
The fuel type (petrol, diesel, electric, hybrid)
The vehicle’s age and list price
In the past, electric vehicles didn’t pay this tax because they don’t emit CO2. This made owning an EV financially appealing, especially when combined with lower fuel and maintenance costs.
The VED rules will change in several ways. Here's a closer look at how the changes will apply:
New EVs Registered On or After 1 April 2025:
These vehicles will pay a first-year rate of VED, based on emissions.
Since EVs produce zero emissions, they will be charged the lowest first-year rate, currently £10 (subject to annual updates).
From the second year onward, these vehicles will pay the standard rate, currently set at £180 per year.
EVs Registered Between 1 April 2017 and 31 March 2025:
These cars have been exempt from road tax, but from April 2025, they will also start paying the standard rate of £180 per year.
Luxury Electric Vehicles (Costing Over £40,000):
If your electric car had a list price of over £40,000 when new, you will need to pay the expensive car supplement, currently £390 per year.
This extra charge applies from the second year to the sixth year after registration.
So even though EVs will still be taxed less than many petrol or diesel cars, these new charges are worth budgeting for.
The UK government says the goal is fairness. As more drivers switch to electric cars, the revenue from traditional road tax is falling. With over 1 million EVs now on UK roads, the Treasury is looking to ensure that all drivers—regardless of fuel type—contribute to the upkeep of roads and infrastructure.
This change is also part of preparing the country for a future where petrol and diesel vehicles are no longer sold. As the government moves toward its 2035 zero-emissions vehicle target, it wants to balance environmental policy with economic sustainability.
Although the tax rates remain lower for EVs compared to petrol or diesel cars, the removal of the exemption means:
Higher yearly ownership costs: Especially for drivers who bought an EV expecting long-term savings.
Less financial incentive: One of the key reasons many chose EVs was to save on taxes and fuel. Now, the tax-saving benefit is smaller.
Budget adjustments: Whether you're a private owner or a business with a fleet, you’ll need to factor in the annual tax costs when considering EV purchases.
That said, EVs still offer advantages like lower running costs, access to Clean Air Zones, and reduced company car tax rates.
If you're already driving an EV or planning to get one, here are some useful tips:
Check your car’s registration date: This will help you understand when and how the VED rules will affect you.
Plan for future expenses: Start including VED in your annual car maintenance and usage budget.
Take advantage of other incentives: The government still offers grants for home EV chargers, lower Benefit-in-Kind rates for company cars, and local council benefits (like reduced parking fees in some areas).
Speak to an accountant or tax advisor: Especially if you use your vehicle for business purposes, a professional can help you maximise tax efficiency despite the new rules.