Electric car drivers have had it good - cruising tax-free while their petrol-powered mates fork out hundreds a year. But the free ride ends in April 2025, when EVs get pulled into the same road tax rules as everyone else.
Before you panic, here’s the truth: EVs are still a bargain.
We’ll break down what you’ll actually pay - from Vehicle Excise Duty (VED) to company car tax - and why plugging in still beats pumping petrol every day of the week.
Let’s dive in…
Key Points:
Before April 2025, battery-electric vehicles (BEVs) pay £0 VED
From April 2025, EVs pay £10 in year one, then £195 annually
EVs over £40k (registered after April 2025) add a £425 supplement for years 2–6
Older EVs (2001–2017) remain at just £20 a year
EVs still beat petrol and diesel on tax and company car rates
The Current Situation (2025)
At the moment, EV drivers are still sitting pretty. If your electric car was registered before 1 April 2025, you’re on the golden ticket: £0 Vehicle Excise Duty (VED) - nothing, zilch, nada.
That’s been one of the biggest carrots dangled in front of drivers to swap fumes for plugs, and it’s worked.
Over a million EVs are now on UK roads, many bought with that juicy “no road tax” perk in mind.
But here’s the twist: the Treasury’s pothole fund isn’t going to top itself up forever.
The government has confirmed that from April 2025 onwards, EVs will join the same tax system as petrol and diesel cars.
Conclusion - the days of bragging about your tax-free Tesla on the group chat are numbered.
What’s Changing?
Circle 1 April 2025 in your diary - that’s when the EV tax holiday officially ends.
From that date, electric cars get pulled into the same Vehicle Excise Duty (VED) rules as petrol and diesel cars. No more free pass.
Why the shift? Simple maths. Fuel duty brings in around £25 billion a year, and as more drivers go electric, that revenue shrinks.
The Treasury isn’t about to wave goodbye to that cash cow without finding a replacement.
By putting EVs on the same tax footing, they’re plugging the gap and “levelling the playing field” (their words, not ours).
And with the ban on new petrol and diesel cars coming in 2030, the government’s laying the groundwork for a future where every driver contributes - whether you’re burning petrol or boosting electrons.
How Much Will It Cost?
Let’s get into the brass tacks. What you’ll pay depends on when your EV was first registered and how much it cost when new.
EVs registered on/after 1 April 2025:
First year VED: £10 (ultra-low emissions band, 1–50g/km CO₂). Basically pocket change.
From year two: £195 per year – same as a petrol or diesel run-around.
Over £40k list price? Add the £425 Expensive Car Supplement from years 2–6. That’s £620 a year total during that period. Painful if you’ve gone big on a Tesla or Porsche Taycan.
EVs registered 1 April 2017 – 31 March 2025:
From April 2025, you’ll pay a flat £195 per year.
No first-year discount, but no pricey car supplement either (unless it already applied when you bought it).
EVs registered 1 March 2001 – 31 March 2017:
Just £20 per year (Band B rate). The old guard get off lightly.
💡 For context: a petrol car pumping out 150g/km CO₂ pays £255 in year one, then £195 each year after. So while EVs lose their free-ride status, they’re still cheaper upfront and only “level” with petrol/diesel from year two – unless you’ve splashed out on a luxury model.
Registration Date | First-Year VED | Ongoing VED | Expensive Car Supplement |
On/after 1 April 2025 | £10 | £195/year | £425/year (years 2–6, if £40k+) |
1 April 2017 – 31 March 2025 | £195 (from Apr 2025) | £195/year | None (unless already applied) |
1 March 2001 – 31 March 2017 | £20 | £20/year | None |
Source: GOV.UK VED rates, April 2025
What about Company Car Tax (BiK Rates)?
If you’re running an EV through work, you’re still laughing compared to petrol and diesel drivers.
The Benefit-in-Kind (BiK) rate for EVs is just 3% in 2025/26, and it only creeps up by 1% each year until 2028.
To put that in perspective:
A £40,000 EV? You’re taxed on just £1,200 of its value.
A diesel belching 160g/km CO₂? You could be taxed on £14,800 of its value, with BiK rates climbing as high as 37%.
That’s night and day. And the perks don’t stop there - businesses can also claim 100% First Year Allowances on new EV purchases, knocking a serious chunk off their corporation tax bill.
Conclusion: EVs remain the company car hack of the decade - low tax for you, big savings for your employer. Everyone wins (except the diesel crowd).
Other Taxes to Be Aware Of
It’s not just VED you need to think about - there are a few other charges lurking in the background:
[1] Congestion Charge (London)
EVs are exempt until December 2025, then it’s game over.
After that, it’s £15 a day, or around £3,750 a year if you’re commuting into central London five days a week. Definitely worth factoring in.
[2] Clean Air Zones (CAZ)
EVs stay exempt in Birmingham, Bristol, Sheffield and other CAZ cities.
Non-compliant petrol/diesel cars face £8–£10 a day, so EV drivers keep saving big here – at least for the foreseeable future.
[3] Insurance Premium Tax (IPT)
EVs don’t get a pass on IPT (6% standard, 20% on some extras).
Plus, insurance itself can be pricier thanks to repair costs and battery tech. The hack? Shop around and switch - loyalty rarely pays in insurance.
Next Steps For Your EV Charger Journey:
When planning to install an EV charger for your home, there are several important factors to consider. Make sure to refer to the following guides to help you make informed decisions:
To dive deeper into these topics, head over to our advice section or check out our YouTube channel for informative videos.
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