EV tax explained - How much vehicle excise duty do electric cars pay?

Electric vehicle (EV) owners can expect some changes to how much vehicle excise duty (VED) they will pay from April 1, 2025.

The changes aim to create a more balanced taxation system as EV adoption increases and will also help the Government to plug the hole left by falling fuel duty revenues.

While these changes introduce new financial considerations for electric car drivers, they also reflect the maturation of the UK's EV market and the need for a sustainable revenue model as more drivers transition away from petrol and diesel cars.

Electric vehicles will still remain an attractive option due to lower running costs, exemptions from Clean Air Zone charges, the convenience of charging at home (for those that can) and the increasing availability of charging infrastructure.

Additionally, as more manufacturers introduce affordable EV models, the market is expected to remain strong, even with this additional tax.

This article provides an overview of the upcoming road tax changes, their implications for EV owners and considerations for prospective buyers.

 

 

How much tax do zero emission vehicles pay?

First-Year rate

Electric vehicles registered on or after April 1, 2025, will incur a first-year VED rate of £10.

This means EV owners will still be paying significantly less in the first year compared to petrol and diesel drivers, reflecting the government's continued support for zero-emission cars.

 

Standard rate

From the second year onwards, these vehicles will be subject to the standard annual VED rate, set at £195.

This vehicle tax rate applies uniformly to all vehicles, so that includes EVs, hybrids, petrol and diesels alike, ensuring, what the UK government describes as "a consistent taxation approach".

 

 

Plug-in cars registered between April 1, 2017 and March 31, 2025

All plug-in vehicles registered between these two dates will also have to pay the standard rate of £195.

 

What about older electric vehicles and hybrids?

There's some good news for early adopters and those that are running slightly older EVs and low emission vehicles. If your EV or hybrid was registered between March 1, 2001 and March 30, 2017, this will move to the Band B VED rate, which is currently £20 a year.

 

What about plug-in hybrids and hybrid cars?

The £10 annual discount for hybrid and alternative fuel vehicles (AFVs) will be removed from April 1, 2025 and the rate you will need to pay then will depend on when the vehicle was first registered.

• registered before April 1, 2017 - this rate will depend on the vehicle’s CO2 emissions (check the current rates for these vehicles)

• registered on or after April 1, 2017 - you will pay the standard rate of £195.

 

What is the Expensive car supplement?

The Audi A6 Avant e-tron pictured above is an example of a vehicle that will be subjected to the expensive car supplement

The Expensive Car Supplement (ECS) or luxury car tax, previously applicable only to petrol and diesel vehicles, will extend to electric vehicles registered on or after April 1, 2025.

This luxury car tax supplement applies to all cars, including electric vehicles with a list price exceeding £40,000.

The UK's automotive industry is trying to get this Expensive Car Supplement scrapped for EVs or at least get the banding increased to above £40,000 in order to make sure sales of electric vehicles are not stifled, but as it stands it will be going ahead.

Affected vehicles will incur an extra £425 annually for five years, starting from the second year of registration.

Consequently, owners of qualifying ECS EVs will pay a total of £620 per year (£195 standard rate + £425 supplement) during this period.

 

Are there any vehicles that are exempt from paying tax?

The road tax changes from April 1, 2025 will bring all cars into scope for paying car tax.

There are some exemptions from VED, but this is around drivers with disabilities or classic cars that were made before January 1, 1984.

 

Are there any other ways I can save tax when running my EV and plug-in hybrid?

Charging your vehicle at home with a smart home charger means you will only pay 5% VAT on the energy used, rather than the 20% rate that is charged on public charging networks.

You can save even more money by switching to a tariff that has been specifically set up to cater for EVs, like Intelligent Octopus Go.

Smart Home Charge customers also get a £50 credit when they switch to Octopus through the Smart Home Charge website.

For those looking to do more research on the costs they can expect when charging their EV, please use our free Cost to Charge tool.

 

How to pay for your car tax

There are multiple ways to pay for road tax. It can be done online (those little paper tax discs have been gone for over 10 years now!) and can be completed at www.gov.uk/vehicle-tax.

For those that don't want to pay digitally, you can still pay for vehicle tax on the phone (0300 123 4321, charges apply), as well at your local Post Office if you'd prefer to fill out forms in person.