The UK’s car tax system is changing in April 2025, bringing significant costs to electric car drivers for the first time.
From April 1, 2025, electric vehicles will no longer be exempt from vehicle excise duty (VED), commonly but incorrectly called “road tax.” This change will align EVs with conventional petrol and diesel vehicles, potentially adding hundreds of pounds to annual EV running costs.
Electric cars have enjoyed tax-free status since their introduction to UK roads — a policy designed to encourage adoption based on their zero-emission status.
What’s changing for EV owners?
Starting April 2025, EV drivers will pay the same annual VED as drivers of conventional vehicles.
While electric cars currently need to be taxed yearly, they sit in Band A of the VED system with a £0 rate. This free band will disappear next year.
The government is simultaneously removing the £10 annual discount for hybrid vehicles and changing the Expensive Car Supplement exemption that EVs currently enjoy.
Zero-emission vans will move to the standard annual rate for petrol and diesel light goods vehicles — currently £290.
Electric motorcycles and tricycles will pay £22 annually, matching the rate for the smallest engine category.
How much will EV tax cost?
Tax costs will vary based on vehicle age and purchase price.
New EVs registered from April 1, 2025, will pay the lowest first-year VED rate of £10. The recent Budget confirmed this rate will remain unchanged until at least 2029-30.
From the second year, these vehicles will move to the standard rate of £195 annually — the same amount owners of EVs registered between April 1, 2017, and March 31, 2025, will pay. For zero-emission cars registered before April 2017, annual VED will be £20.
Electric cars costing over £40,000 face an additional Expensive Car Supplement from April 1. This adds £425 yearly to the tax bill from years two through six of ownership.
Campaigners warn this supplement will affect a disproportionate number of EVs due to their higher average price, potentially hampering adoption. Some manufacturers have already reduced prices to bring models under the £40,000 threshold.
The government has acknowledged this “disproportionate impact” on EVs and indicated it might raise the threshold at a “future fiscal event.” However, with changes just weeks away, no adjustment has been announced.
How to tax your electric car
The taxation process remains unchanged. Owners can tax their vehicles online through the official DVLA website, by phone, or by post. The only difference is the new cost replacing the previous £0 rate.
Will existing EVs be affected?
Yes. Unlike some tax changes, next year’s rules apply to all electric cars, vans, and bikes — including those already on the road.
Why is the government taxing EVs?
The government faces a significant revenue shortfall as more drivers switch to electric vehicles.
Conventional vehicles generate revenue through both VED and fuel duty — currently 52.95p per liter. The Treasury estimates the transition to EVs could cost it £35 billion annually in coming years.
Imposing tax on zero-emission vehicles helps address this gap. The Treasury projects the change will generate an additional £515 million in 2025-26, rising to £1.5 billion by 2027-28.
When announcing the plan, the Treasury stated that removing the VED exemption “will marginally reduce the incentive to switch to electric vehicles, but the impact should be minimal given the marginal cost of VED compared to the overall cost of a vehicle.”
The government will maintain other incentives, including favorable company car tax rates. Benefit in Kind tax on EVs is currently 2% and will increase by 1% annually from 2025 to 2028. In comparison, the lowest BiK on petrol or diesel cars is 15%, rising to 18% by 2028 — keeping EVs particularly attractive to company car drivers.
