Electric car tax changes: What is coming up?
Drivers of electric vehicles could face some steep changes in tax, but who is affected and by how much?
Drivers of electric vehicles haven’t had to pay any tax on their cars for many years, but in 2025 that is set to change as several wide-sweeping tweaks come into force. As electric vehicle ownership has grown, changes to Vehicle Excise Duty – or VED – could affect thousands of drivers when they start to apply on April 1.
But what should drivers of electric vehicles expect and what is the change in terms of cost? Here, we explain what’s on the horizon.
What is the current state of tax for electric vehicles?
Only completely electric cars are free-to-tax, though some extremely low-emission hybrids also qualify but only those produced between March 1, 2001 and March 31, 2017.
What’s changing in 2025?
As of April 1, 2025, things are set to change for electric vehicles. For the first time, drivers of electric vehicles will be required to pay VED, representing a significant hike in the cost of ownership. Plus, a new Expensive Car Supplement will see buyers of electric vehicles costing over £40,000 paying as much as £620 a year in tax.
For electric, zero or low emissions vehicles registered on or after April 1, 2025, drivers will have to pay the lowest first-rate of tax – £10 – but from the second tax payment onwards, this will rise to the standard rate of £195 a year.
Electric, zero or low-emission cars registered between April 1, 2017 and March 31, 2025, will now pay the standard rate of £195. In contrast, EVs registered between March 1, 2001 and March 31, 2017, will move to the first band that has a VED value, meaning a tax payment of £20.
Electric vehicles have also – up until this point – been exempt from the Expensive Car Supplement, but that all changes from April 1 with cars registered on or after this date are now liable for the additional cost. What does that mean? Well, drivers of EVs costing over £40,000 will have to pay a standard rate alongside an additional supplement for the first five years from the start of the second payment. For many, this means many owners of an EV over £40,000 will pay £620 per year in road tax.
Will electric vehicles still prove cheaper to run than petrol and diesel cars?
Electric vehicles do require less maintenance than an equivalent petrol or diesel car, too, since there are fewer moving parts. That said, EVs still need regularly checking over to make sure that key components are still working as required and consumables such as tyres, wipers and brake pads will still need to be replaced.
