- At the moment, drivers of EVs in the UK benefit from an annual electric car road tax (Vehicle Excise Duty) rate of £0, which has undoubtedly helped drive EV sales in the earlier years of adoption.
- With the market share of EVs continuing to grow, and a ban on new pure petrol and diesel cars in 2030 looming, the government will need to make up for that missed revenue somewhere – with some level of electric car road tax now being imposed on all EVs, including those already on the road, from April 2025.
- Here’s everything you need to know about the electric car road tax changes in the UK for 2025.
How much will electric car tax be in 2025?
While all EVs registered in or after April 2025 will be subject to electric car road tax, these also extend to electric cars that have already been registered on the road and currently benefit from a Vehicle Excise Duty (VED) rate of £0. These rates, which fall into a number of categories, are broken down below:
- Existing EVs, Registered between 01/03/2001 and 31/03/2017 – Annual VED of £20
- Existing EVs, Registered between 01/04/2017 and 31/03/2025 – Annual VED of £195
- New EVs, Registered after 01/04/2025 – VED of £10 in Year 1, Followed by Annual VED of £195
What about the ‘luxury car tax’?
The 1st of April 2025 also marks the introduction of the luxury car tax (officially named the expensive car supplement) for new zero emission vehicles. For any EV registered after this date with a list price above the £40,000 mark, the duty situation is a little more complex:
- VED of £10 for 1st year of registration
- From 2nd year, EV is charged both a standard £195 annual rate, plus an additional £410 expensive car supplement for 5 years
- After 5 years of paying expensive car supplement, annual VED owed drops back to £195 a year (if standard VED rate is not increased by then)
While the expensive car supplement is set to come into place in under two months, there has been notable opposition in the industry. Following January’s EV sales figures, SMMT Head Mike Hawes said:
“January’s figures show EV demand is growing – but not fast enough to deliver on current ambitions. Affordability remains a major barrier to uptake, hence the need for compelling measures to boost demand, and not just from manufacturers. The application, therefore, of the ‘Expensive Car Supplement’ to VED on electric vehicles is the wrong measure at the wrong time. Rather than penalising EV buyers, we should be taking every step to encourage more drivers to make the switch, helping meet government, industry and societal climate change goals.”
Even with these changes, EV VED rates still remain much cheaper than those imposed on the highest CO2-emitting new ICE cars on the road. However, you might notice more manufacturers adjusting the list prices of new EVs to avoid this supplement. Vauxhall’s new Grandland Electric has strategically been priced below £40,000 for the most popular trim levels, while Stellantis recently dropped the price of its Abarth 600e Scorpionissima from £41,975 to £39,875, in anticipation of the expensive car supplement.
