Electric car tax 2025: UK road tax changes explained and how much EV drivers will pay
The UK’s car tax system is changing in April 2025, and will have a huge impact on electric car drivers. Here’s all you need to know about what cars are affected and how much it will cost.
Electric car tax is in the news once again as various EV campaigners warn that impending changes could harm the UK’s green ambitions.
The matter has become such a hot topic again because, from April 2025, the rules around car tax (or road tax, or VED) on electric vehicles are being updated to bring EVs more into line with other types of cars.
Since electric cars began arriving on the UK’s roads they have enjoyed the benefit of being tax exempt – a policy introduced to help encourage drivers to switch an EV and based on their lack of emissions.
However, from April 1, 2025, that will no longer be the case and EV drivers will be subject to new charges that will potentially add hundreds of pounds per year to the running cost of an electric car.
Officially known as vehicle excise duty (VED) and often wrongly as ‘road tax’, car tax is an annual levy on drivers of most petrol, diesel and LPG cars. Costs vary depending on the age of the car, its CO2 emissions, fuel type and even original purchase price but until now the charges haven’t applied to electric cars.
What is changing?
From 1 April 2025 EV drivers will have to pay the same annual car VED as every other driver.
Electric cars already need to be taxed every year but the cost of that is currently £0 as they sit in Band A of the VED system.
From April 1, 2025, Band A will no longer be free and all EVs will be liable for tax. At the same time, the government is dropping the £10-per-year discount for hybrid vehicles and changing the Expensive Car Supplement exemption on EVs.
It is also changing the rules on electric vans and motorcycles. From April 2025, most zero emission vans will move to the standard annual rate for petrol and diesel light goods vehicles, currently £290.
Zero emission motorcycles and tricycles will move to the annual rate for the smallest engine size – £22.
How much will electric car tax cost?
The cost of electric car tax will vary depending on the age and purchase price of the vehicle.
New EVs registered from 1 April 2025 will be liable for the lowest first-year VED rate – currently £10. The recent Budget confirmed that that cost would remain the same until at least the 2029-30 financial year.
From the second year, electric cars will move on to the standard VED rate, which from April 1 will be £195 a year. This is also how much owners of EVs registered between April 1, 2017 and March 31, 2025 will have to pay, and the same as petrol and diesel drivers. For zero-emission cars registered before April 2017, annual VED will be £20.
Electric cars costing more than £40,000 are also due to be hit with the Expensive Car Supplement from April 1. This charge is levied on any newly registered car costing more than £40,000 and adds another £425 per year to the tax bill from years two to six.
Campaigners have warned this will affect a disproportionate number of EVs due to their higher average price and could hurt EV uptake. Some manufacturers have cut prices to bring their cars under the threshold. In the most recent Budget, the government acknowledged the ‘disproportionate impact’ this would have on EVs, and said it would consider raising the threshold at a ‘future fiscal event’.
However, just weeks out from the changes, there is no sign of the threshold being changed for EVs, or for the extension to be renewed.
How do I tax my electric car?
The way you tax an EV won’t change. As before, you can do it online via the official DVLA website, over the phone or by post. The only difference is that from 1 April, 2025, there will be a cost attached, rather than the wallet-friendly £0 rate you’ve paid until now.
Does this only affect new electric cars?
Sadly not. Unlike some tax changes, next year’s new rules will apply to all electric cars, vans and bikes including those already on the road.
Why are EVs being charged car tax?
The simple reason is that the more people switch to EVs, the more money the government loses.
As well as VED, fossil fuel vehicles bring in money in the form of fuel duty – currently 52.95p on every litre. It is estimated that in coming years, the reduction in income from this and VED will cost the Treasury £35 billion per year.
So it needs to plug that gap and imposing tax on zero-emissions vehicles is a quick and simple way to make a start. The Treasury estimates that in 2025-26 alone, it will bring in an additional £515 million and by 2027-28 will be worth £1.5bn.
When it announced the plan the Treasury said 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”.
It also said that it would maintain incentives such as low company car tax rates.
Benefit in Kind tax on EVs is currently 2% and is set to rise by 1% per year from 2025 to 2028. In comparison, the lowest BiK on a petrol or diesel car is 15%, rising to 18% in 2028, making EVs particularly attractive to company car drivers.
