From April 1, 2025, electric vehicle (EV) owners in the UK will be required to pay road tax, also known as Vehicle Excise Duty (VED), for the first time. The Government regularly looks into how the car tax system might need to adapt as the types of car being sold change. With electric cars becoming increasingly mainstream, it’s no surprise that from April 2025, electric cars will no longer be free to tax. This new regulation will impact thousands of EV owners, affecting their annual motoring costs. This article explains the upcoming changes and how they will affect current and future EV owners.
Understanding Electric Car Road Tax
Road tax, or VED, is an annual fee imposed on vehicles used or parked on public roads in the UK. It helps fund road maintenance and infrastructure improvements. Traditionally, VED is calculated based on a vehicle’s emissions, with higher emissions resulting in higher taxes. Starting in 2025, even zero-emission vehicles, including electric cars, will be subject to VED.
Current EV Road Tax Requirements
Currently, all vehicles, including EVs, must be registered for road tax to be driven on UK roads. However, EV owners currently do not pay any VED, as it is provided free of charge. This will change in April 2025.
How Much Do EV Owners Currently Pay?
At present, EV drivers do not pay road tax, but they still need to register their vehicles for tax purposes. To qualify for the current VED exemption, the electricity used to charge the EV must come from an external source, such as a private or public charge point, an electric storage battery not connected to a power source while driving, or hydrogen fuel cells. Other vehicles, including hybrids, must pay VED annually.
Changes to EV Road Tax Costs
Starting April 1, 2025, the following VED rates will apply to electric vehicles:
- New Zero-Emission Cars Registered on or After April 1, 2025: These vehicles will pay the lowest first-year VED rate, currently £10 per year, applicable to vehicles with CO2 emissions of 1 to 50g/km. From the second year onwards, they will pay the standard rate (Currently £190 per year.)
- Zero-Emission Cars Registered Between April 1, 2017, and March 31, 2025: These vehicles will move to the standard rate, as above.
- Expensive Car Supplement: The exemption for electric vehicles will end in 2025. New zero-emission cars registered on or after April 1, 2025, with a list price exceeding £40,000 will be subject to this supplement for five years. The Expensive Car Supplement is a £410 surcharge, which brings the annual tax rate to £600.
- Zero and Low Emission Cars Registered Between March 1, 2001, and March 30, 2017: These vehicles, currently in Band A, will move to Band B, which is currently £20 per year.
- Zero-Emission Vans: These will be taxed at the rate for petrol and diesel light goods vehicles, currently £335 per year for most vans.
- Zero-Emission Motorcycles and Tricycles: These will be taxed at the rate for the smallest engine size, currently £25 per year.
- Alternative Fuel Vehicles and Hybrids: Rates for these vehicles will be equalized with other types.
These changes, announced by Chancellor Jeremy Hunt in the 2022 Autumn Budget, are said to aim to create a fairer motoring tax system by including electric vehicles in the VED framework. At AMT Auto, we’re committed to keeping our customers up-to-date with the latest developments in EV taxation to help you make informed decisions on your lease. Contact the team today to discuss how to lease an electric vehicle.