Understanding Vehicle Excise Duty (VED) or "Road Tax" for EVs
Vehicle Excise Duty (VED), commonly referred to as road tax, is a tax levied on vehicles used on UK roads. Historically, electric vehicles (EVs) have been exempt from this charge. However, from April 2025, changes to VED rules mean that EV owners will be required to pay road tax.
FAQs about EVs and Road Tax
With upcoming changes to road tax for EVs, you may have questions about how these updates will affect you. Below, we address the most common concerns and provide clear answers to help you stay informed.
Good to know
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The VED changes coming in April this year will affect both new and existing electric vehicles
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The amount of VED payable will depend on the vehicle's emissions, registration date and list price (for new electric cars)
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Overall, the new VED rules mean that electric car owners will have to pay road tax for the first time
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However, the rates are still significantly lower than those for petrol and diesel vehicles, and the government hopes that the changes will encourage the uptake of electric vehicles
Are electric vehicles (EVs) exempt from road tax in the UK?
Yes, as of now, fully electric vehicles are exempt from paying VED. However, this will change from April 2025 when EVs will become subject to road tax like petrol and diesel cars.
How much road tax will electric vehicle (EV) owners pay from 2025?
From April 2025, EVs registered on or after April 1, 2017, will pay the standard annual rate of VED, which will be £195 per year from April 1st 2025.
EVs registered between 1st March 2001 and 30th March 2017 will be subject to the reduced rate for older vehicles of £20 per year.
Vehicle registration date |
Cost per annum |
|---|---|
Between 1 April 2017 and 31 March 2025 |
£195** (standard VED rate) |
Between 1 April 2017 and 31 March 2025 with a list price of £40,000+ |
£195** (standard VED rate) |
Before 1st April 2017 |
£20 |
Do expensive electric cars over £40,000 pay more road tax?
New electric cars (registered on or after 1st April 2025) with a list price of £40,000 or more will also be subject to the expensive car supplement. This means an additional charge (£425 per year) will apply from the second to the sixth year of registration, bringing the total to £620 per year for that period.
List price |
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
Year 6 |
Year 7 |
|---|---|---|---|---|---|---|---|
Less than £40,000 |
£20 |
£195** |
£195 |
£195 |
£195 |
£195 |
£195 |
£40,000 and over |
£20 |
£620*** |
£620 |
£620 |
£620 |
£620 |
£195** |
Are electric vans subject to road tax in 2025?
Yes, electric vans will also be subject to road tax from April 2025. Currently, light commercial EVs benefit from a zero-VED rate, but they will soon be required to pay the same standard rates as other light goods vehicles. This means businesses and individuals using electric vans should anticipate additional costs, though EV vans will still offer lower running costs compared to their petrol or diesel counterparts.
Will plug-in hybrid vehicles have to pay full road tax?
Yes, plug-in hybrid vehicles (PHEVs) will also see an increase in VED. From April 2025, they will no longer benefit from reduced rates and will pay the same standard rates as petrol and diesel cars.
Why is the UK government introducing road tax for EVs?
The UK government is implementing these changes to ensure fairness across all vehicle types and to compensate for the reduction in fuel duty revenue as more drivers transition to EVs.
Will this affect company car tax for EVs?
No, Benefit-in-Kind (BiK) tax rates for company EVs remain significantly lower than those for petrol and diesel vehicles, making them an attractive option for business users.
Does my Personal Contract Hire (PCH) or Business Contract Hire (BCH) lease include road tax?
When you take out a lease, the cost of road tax is included at the rate applicable at that time. However, if the government increases VED during your lease term, your funder will issue a one-off invoice to cover the additional cost. This is usually a small adjustment, but since EVs have previously paid £0 VED, the increase will be more noticeable for PCH and BCH customers this year.
When will I receive the VED invoice?
The VED rate for EVs is changing in April 2025, however your funder will re-charge the VED amount around the time your lease car reaches its registration anniversary. So you may not need to pay anything until as late as March 2026 depending on the date your car was registered.
Will EVs still be a good financial choice despite the road tax change?
While VED will be introduced for EVs, they still offer lower running costs, tax benefits, and environmental advantages compared to traditional petrol or diesel vehicles.
Leasing an EV remains a cost-effective and eco-friendly choice despite the upcoming changes to road tax. If you have any questions about how this might affect your lease, feel free to contact our team for more information.
*A “New” zero emission electric vehicle registered on or after 1st April 2025
**the standard rate of VED is subject to change, figures accurate to April 2025 rate of £195 / annum
*** The expensive car supplement charge is subject to change. Figures accurate to April 2025 rate £425 per annum
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