Did you know that one of the biggest incentives to drive an electric vehicle has just vanished? EVs used to be exempt from car tax – otherwise known as road tax, or Vehicle Excise Duty (VED).
However, all this changed on 1 April 2025, and now they are taxed, just like petrol and diesel cars. So, the change in the rules means that anyone with an electric car will now pay at least some road tax.
What is car tax?
The Vehicle Excise Duty is a charge that you have to pay on any car that’s registered in the UK and driven or kept on a public road.
What’s changed for EVs?
Electric car owners now have to pay tax. The exact amount you pay depends on the age of the electric vehicle you drive.
1) New electric cars registered on or after 1 April 2025: You will need to pay the lowest first-year rate of vehicle tax set at £10 from 1 April 2025. From the second tax payment onwards, you will pay the standard rate. That’s £195 every year.
2) Electric cars registered between 1 April 2017 and 31 March 2025: You will pay the standard rate. That’s £195.
3) Electric cars registered between 1 March 2001 and 31 March 2017: These vehicles will move to the first band that has a VED value. That’s £20.
Why are EVs no longer road tax exempt?
© Matt VosperVED exemption was an initial benefit to increase the uptake of electric cars. As more and more drivers choose EVs over conventional diesel and petrol cars, the government needs to maintain tax income from drivers.
What else has changed for EV owners in 2025?
From 1 April 2025, owners of brand new electric vehicles are now also subject to the Expensive Car Supplement, otherwise known as the luxury car tax.
Before 1 April 2025, only petrol, diesel and hybrid cars were liable for the extra charge. So, any EV registered prior to 1 April will not have to pay it.
What is the Expensive Car Supplement?
Introduced in 2017, the Expensive Car Supplement is an additional fee levied on cars that cost more than £40,000 new.
Before 1 April 2025, only petrol, diesel and hybrid cars were liable for the extra charge.
The Expensive Car Supplement kicks in after the first year, so drivers of more expensive EVs pay the lower £10 rate in year one, followed by £620 in years two to six of ownership – that’s the standard road tax rate (£195) plus the surcharge (£425).
Are any cars still exempt from road tax?
The only vehicles now able to escape the yearly charge are classic cars aged over 40 years old, agricultural vehicles such as tractors, and vehicles used by people with disabilities.
What are the other big costs for EV owners?
In addition to car tax, drivers of electric cars should also budget for:
1) Electricity costs: Charging an electric car at home will increase your electricity consumption, but it’s much cheaper than using public chargers.
2) Car insurance: The cost of insuring an EV will depend on factors such as your driving history, the specific model, your location, your job and the insurance provider. There is some evidence that insuring electric cars is slightly more expensive because they tend to have a higher value, and repair costs can be more complex and costly.
3) Servicing and maintenance: Electric cars have fewer moving parts and require less maintenance compared to traditional combustion engine vehicles. However, EVs still need basic routine car maintenance (e.g. fluid top-ups), plus annual servicing and MOTs (after year three).
Are electric vehicles cheaper to run than petrol and diesel cars?
Even though EV drivers now have to pay road tax, running an electric car can often be significantly cheaper than a petrol or diesel vehicle, especially if you have a home charger, so that you can take advantage of lower electricity tariffs.
Recent research by The Times estimated that a diesel car costs an average of 12.5p per mile to fuel and a petrol vehicle 14.5p per mile, while an EV costs as little as 8p per mile if you charge from home, but as much as 24.1p per mile if you rely on more expensive public chargers.
Do EV drivers get other benefits?
© Getty ImagesIf you live or commute into central London and drive an electric vehicle, you are exempt (until December 2025) from the Congestion Charge, which is £15 per day. So, if you drive to work within the zone, you could save £330 per month, based on an average of 22 working days. Taken over a year (260 working days), that’s £3,900 per annum. Other UK cities also have congestion charge zones with preferential treatment for EVs, and more are planned.
Would a switch to an electric company car save money?
Business users can make savings running into four figures by switching to an electric car. If you use your company EV for business and personal use, this creates a ‘benefit in kind’ (BiK) and you are required to pay tax on the benefit received. The government incentivises the use of electric vehicles, so an employee using an EV will pay far less tax than a colleague driving a petrol or diesel model.
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