Road tax for electric vehicles

by Michael Blaken

Are you an electric vehicle (EV) owner? Or are you considering making the switch to electric? If so, it’s crucial to be aware of upcoming changes to road tax, also known as Vehicle Excise Duty (VED). Starting April 1, 2025, the current exemption for EVs will come to an end, meaning you’ll need to factor road tax into your running costs.

Current situation: free road tax for EVs

Currently, drivers of electric vehicles enjoy the benefit of zero road tax. However, it’s important to remember that you still need to tax your vehicle, even if there’s no fee to pay.

The new rules will impact hundreds of thousands of EV owners and their electric vehicle running costs. As well as paying for road tax for the first time, there will also be a hefty car tax supplement for electric cars with a list price that exceeds £40,000.

Here’s our guide to the new electric vehicle road tax changes, setting out what VED costs EV owners can expect right now and how much they will pay when the tax rules change in April.

How much will electric vehicle road tax be?

From 1 April 2025, drivers of electric vehicles will need to pay road tax for the first time. For most EV drivers, this will be £195 a year, while drivers of new electric cars with a list price that exceeds £40,000 could pay as much as £620 a year. 

• New zero-emission cars registered on or after 1 April 2025 will be liable to the lowest first-year rate of road tax, which is currently £10 a year.
• From the second year of registration onwards, they will move to the standard rate, of £195 a year.
• Zero emission cars first registered between 1 April 2017 and 31 March 2025 will also pay the £195 standard rate.
• The Expensive Car Supplement exemption for electric vehicles will end on 1 April 2025. This means, new zero emission cars registered on or after 1 April will be liable for the Expensive Car Supplement – applied to cars with a list price exceeding £40,000. This adds an extra £425 bringing the total annual road tax for ‘expensive’ cars to £620. The surcharge is applied for five years, starting from the second year of registration. 
• Zero and low emission cars first registered between 1 March 2001 and 30 March 2017, currently in Band A will move to the Band B rate, paying £20 a year
• Zero emission vans will move to the rate for petrol and diesel light goods vehicles, currently £335 a year for most vans
• Zero emission motorcycles and tricycles will move to the rate for the smallest engine size, currently £25 a year
• Rates for Alternative Fuel Vehicles and hybrids will also be equalised

Why the change?

These changes will undoubtedly impact the running costs of EVs, particularly for those owning higher-priced models. It’s essential to factor these costs into your budget when considering an EV purchase.

What this means for EV owners

The government’s decision to end the EV road tax exemption is part of a broader strategy to ensure all road users contribute to the maintenance of the UK’s road network. As the number of EVs on the road increases, it’s becoming necessary to adjust the tax system accordingly.

To talk to us about tax planning and running a vehicle through your business, please get in touch with our tax team. We work with business owners in Swindon, Wiltshire, Cheltenham, Gloucestershire and the wider area.