Molly Ayala
Electric vehicles (EVs) have been exempt from paying road tax due to their zero emissions and positive environmental impact. However, this is set to change from April 2025, when EVs will become subject to road tax, bringing them in line with petrol and diesel vehicles. This change has been implemented by the UK government to ensure fairness across all vehicle types and to compensate for the reduction in fuel duty revenue as more people transition to EVs. While the exact rates may vary, EVs registered on or after April 1, 2017, are expected to pay an annual standard rate of £195. New electric cars with a list price exceeding £40,000 will also be subject to an additional expensive car supplement, resulting in a total annual cost of £620 for the first five years.
| Characteristics | Values |
|---|---|
| Current status of road tax exemption for electric vehicles | Electric vehicles are currently exempt from paying road tax. |
| Reason for exemption | Electric vehicles produce zero emissions. |
| Future status of exemption | From 1 April 2025, electric vehicles will no longer be exempt and will pay the same tax as petrol and diesel vehicles. |
| Tax amount from April 2025 | The standard annual rate of £195 per year. EVs registered between 1st March 2001 and 30th March 2017 will be subject to a reduced rate of £20 per year. |
| Additional charges | New electric cars registered on or after 1st April 2025 with a list price of £40,000 or more will be subject to an additional charge of £425 per year for the first five years. |
| Plug-in hybrid vehicles (PHEVs) | Will see an increase in tax and will pay the same standard rates as petrol and diesel cars. |
| Benefit-in-Kind (BiK) tax rates for company EVs | Remain lower than those for petrol and diesel vehicles. |
| ULEZ exemption | EVs are exempt from ULEZ charges until 25 December 2025. |
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What You'll Learn
Electric vehicles (EVs) are currently exempt from road tax
However, this will change from April 2025 when EVs will become subject to road tax like petrol and diesel cars. This change will apply to both new and existing vehicles. This new measure will remove band A under the existing VED system, which is currently £0. Vehicles in this band will be required to move to the first band where a rate becomes payable. This will be the lowest first-year rate of vehicle tax, set at £10 from 1 April 2025. From the second tax payment onwards, the standard rate of £195 per year will be payable.
New electric cars registered on or after 1 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 of £425 per year will apply from the second to the sixth year of registration, bringing the total to £620 per year for that period.
Despite these upcoming changes, leasing an EV remains a cost-effective and eco-friendly choice. 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.
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From April 2025, EVs will be subject to road tax
Electric vehicles (EVs) are currently exempt from paying road tax due to their zero carbon emissions. However, this will change from April 2025 when EVs will become subject to road tax, just like petrol and diesel cars. This change will apply to both new and existing vehicles.
From April 1, 2025, EVs will be taxed according to the standard annual rate of Vehicle Excise Duty (VED), which is the same rate that petrol and diesel cars are currently taxed at. This means that most EV drivers will have to pay £195 per year to tax their vehicles. This is a significant change from the current situation, where EV drivers can get their vehicles taxed for free, although they are still required to go through the taxing process.
There will be different rates for EVs registered before and after April 1, 2025. EVs registered on or after this date will pay the standard annual rate of £195 per year. For EVs registered between March 1, 2001, and March 30, 2017, a reduced rate of £20 per year will apply. Additionally, new electric cars registered on or after April 1, 2025, with a list price of £40,000 or more will be subject to the expensive car supplement, resulting in an additional charge of £425 per year from the second to the sixth year of registration, bringing the total to £620 per year for that period.
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. While this change may impact the decision-making process for those considering an EV, leasing an EV remains a cost-effective and eco-friendly choice. Additionally, other benefits of owning an EV, such as cheaper running costs and environmental advantages, still remain.
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EVs registered before April 1, 2017, will pay a reduced rate
Electric vehicles (EVs) are currently exempt from paying road tax or Vehicle Excise Duty (VED) due to their environmental impact and zero emissions. However, this is set to change from April 2025, when EVs will become subject to road tax, just like petrol and diesel cars. From then on, EVs registered on or after April 1, 2017, will pay the standard annual rate of VED, which will be £195 per year.
It is important to note that these changes in road tax do not apply to electric vehicles used for disabilities, historical vehicles, or agricultural vehicles like tractors. Additionally, Benefit-in-Kind (BiK) tax rates for company EVs remain lower than those for petrol and diesel vehicles, making them a cost-effective choice for businesses.
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EVs with a list price of £40,000 or more will pay an additional charge
Electric vehicles (EVs) are currently exempt from paying road tax due to their zero emissions. However, this exemption will not last forever. From April 2025, EVs will be subject to road tax just like petrol and diesel cars. This change will apply to both new and existing vehicles.
The standard annual rate of Vehicle Excise Duty (VED) or "road tax" for EVs from April 1, 2025, onwards will be £195 per year. EVs registered between March 1, 2001, and March 30, 2017, will be subject to a reduced rate for older vehicles of £20 per year.
Now, here is the key part about EVs with a list price of £40,000 or more: These vehicles, if registered on or after April 1, 2025, will be subject to an additional charge. This is called the expensive car supplement, and it amounts to £425 per year. This supplement will be in effect from the second to the sixth year of registration, bringing the total amount payable during that period to £620 per year.
This change in taxation policy is being implemented by the UK government to ensure fairness across all vehicle types and to compensate for the reduction in fuel duty revenue as more drivers transition to EVs. While this will increase costs for EV owners, leasing an EV will remain a cost-effective and eco-friendly choice. Additionally, company EVs will continue to benefit from significantly lower Benefit-in-Kind (BiK) tax rates compared to petrol and diesel vehicles.
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EVs are still exempt from ULEZ charges until December 25, 2025
Electric vehicles (EVs) are currently exempt from road tax due to their zero-emissions status. However, this exemption will come to an end in April 2025, when EVs will become subject to road tax similar to petrol and diesel cars. This change will apply to both new and existing vehicles, with rates varying based on the vehicle's registration date and list price. Despite this upcoming change, leasing an EV remains a cost-effective option, and EVs continue to offer various benefits, including reduced running costs compared to petrol and diesel cars.
While road tax exemptions for EVs will soon end, it's important to note that EVs are still exempt from Ultra Low Emission Zone (ULEZ) charges in London. The ULEZ, introduced in 2019, requires vehicles to meet certain emission standards or pay a daily fee of £12.50 when driving within the zone. This fee is separate from the Congestion Charge and applies 24 hours a day, every day except Christmas Day. The ULEZ area covers the entire Greater London area, and its aim is to improve air quality and encourage the adoption of zero-emission vehicles.
Fully electric vehicles are exempt from ULEZ charges because they produce no tailpipe emissions, making them compliant with the zone's pollution standards. This exemption for EVs is expected to continue for the foreseeable future, making electric cars a cost-effective and environmentally friendly choice for drivers in London. However, it's important to note that this exemption may not be permanent, and changes could be announced in the future.
While EVs are currently exempt from ULEZ charges, some hybrid electric vehicles may need to pay the fee. Although most hybrids meet the emission standards, it's essential to check your vehicle's emissions to ensure compliance. Additionally, petrol, diesel, and specialist vehicles up to 3.5 tonnes that do not meet the standards will be subject to the daily charge.
In summary, while EVs will soon become subject to road tax, they remain exempt from ULEZ charges until at least December 25, 2025. This exemption makes electric vehicles an attractive option for drivers in London, as it helps reduce overall driving costs and contributes to improved air quality in the city.
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Frequently asked questions
Yes, electric vehicles are currently exempt from road tax. This is because the amount of road tax you pay is calculated by the emissions your vehicle produces, and electric vehicles produce no emissions.
No. From 1 April 2025, electric vehicles will no longer be exempt from road tax. This will apply to both new and existing vehicles.
The standard rate will be £195 per year. However, electric vehicles registered on or after 1 April 2025 with a list price of over £40,000 will also be subject to the expensive car supplement, which is an additional charge of £425 per year from the second to the sixth year of registration, bringing the total to £620 per year for that period.
