Do Electric Cars Pay Road Tax

Introduction

As more people in the UK switch to electric vehicles, one of the most common questions asked by drivers is whether electric cars pay road tax. For many years, electric vehicles were completely exempt from Vehicle Excise Duty, often called road tax, because they produced zero emissions. This tax break helped encourage drivers to move away from petrol and diesel cars and adopt cleaner alternatives. However, from April 2025, the rules changed, and electric car owners will now be required to pay road tax just like everyone else. Understanding how this works is essential for anyone considering buying or leasing an EV in the near future.

This article explains everything UK drivers need to know about road tax for electric cars, including why the change happened, how much it costs, and which vehicles are affected. It also outlines what this means for existing EV owners, how it compares to petrol and diesel cars, and what the future may hold for vehicle taxation in the UK.

What is Vehicle Excise Duty (Road Tax)?

Vehicle Excise Duty, or VED, is the annual tax that drivers pay to legally use their vehicles on public roads in the UK. It is collected by the Driver and Vehicle Licensing Agency and has existed in various forms for over a century. While many people think of it as a payment for road use, in reality, it is a vehicle licensing fee based on emissions, age, or list price.

Historically, petrol and diesel vehicles have paid road tax depending on their carbon dioxide emissions, with higher-emission vehicles paying more. Hybrid vehicles often paid a reduced rate, while zero-emission electric cars were fully exempt. This exemption was introduced to promote cleaner transport and help the government meet its emissions reduction targets.

The History of Road Tax Exemptions for Electric Cars

When electric vehicles first entered the UK market, they were granted a full exemption from VED to encourage uptake. This was an attractive incentive for early adopters, as road tax could add hundreds of pounds a year to running costs. The exemption was seen as a reward for choosing a cleaner, greener mode of transport that produced no tailpipe emissions.

As the number of EVs on UK roads grew, this policy became less sustainable. More drivers switching to electric vehicles meant a growing number of cars paying no tax, while the government’s revenue from road tax and fuel duty continued to decline. To balance this and ensure fairness between all drivers, the government announced in 2022 that electric vehicles would be brought into the standard road tax system from April 2025.

The Current Road Tax Rules for Electric Cars

The new road tax rules for electric cars depend on when the vehicle was first registered. Below is a breakdown of how the system now works in 2025 and beyond.

Electric cars registered on or after 1 April 2025 will no longer be exempt. These vehicles will pay the lowest first-year rate of £10, followed by the standard annual rate of £190 from the second year onwards. If the car’s list price when new was more than £40,000, owners will also have to pay the Expensive Car Supplement, sometimes referred to as the luxury car tax. This supplement adds an extra £390 per year for five years, covering years two to six of ownership.

Electric cars registered between 1 April 2017 and 31 March 2025 will also now pay the standard annual rate of £190. This applies to vehicles that were originally exempt under the zero-emission rules but are now included in the new taxation structure.

Older electric cars registered between 1 March 2001 and 31 March 2017 remain in the lower tax bands. These vehicles typically pay around £20 per year, although exact amounts can vary slightly depending on vehicle classification and model year.

Why the Government Changed the Rules

The main reason for the change is fairness and revenue balance. When road tax was first designed to penalise polluting vehicles, electric cars made up a tiny percentage of cars on the road. But as the UK moves towards its 2035 zero-emission target, the number of EVs has surged. By 2025, it was no longer sustainable for millions of drivers to avoid paying road tax altogether.

Additionally, the government’s income from fuel duty has been declining. Since electric cars do not use petrol or diesel, there is no fuel tax revenue from EV drivers. Bringing electric cars into the road tax system helps to replace some of this lost income while maintaining the incentives for clean driving through lower running costs and zero tailpipe emissions.

How Much Road Tax Will Electric Car Owners Pay?

The amount you pay depends primarily on when your electric car was registered and its original list price. For new EVs registered from April 2025, the first-year rate is £10, rising to £190 from the second year onwards. If your vehicle cost more than £40,000 when new, you will also pay the Expensive Car Supplement of £390 for five years. This makes your total annual tax £580 for those five years.

Used EVs registered before April 2025 will pay the standard rate of £190 per year, while older electric cars registered before 2017 may still benefit from much lower rates. These figures bring electric vehicles in line with most petrol and diesel models on the road today.

Although this change increases the annual running cost of owning an EV, electric cars still offer significant savings compared to traditional vehicles. Lower fuel costs, reduced maintenance, and the potential for cheaper off-peak home charging can easily offset the tax charge for most drivers.

How Road Tax Works for Company Cars and Fleets

For businesses and company car drivers, electric vehicles remain an attractive option despite the road tax change. While Vehicle Excise Duty now applies, Benefit-in-Kind (BiK) tax rates for company car drivers are still much lower for EVs compared to petrol and diesel models. This means that even with road tax factored in, electric cars remain financially appealing for fleets and business users.

Employers who provide EVs for business use can also benefit from lower National Insurance contributions and claim capital allowances for vehicles with zero emissions. Even as road tax rules tighten, other incentives help balance the overall cost equation for businesses transitioning to electric fleets.

Do Hybrid Cars Pay Road Tax?

Plug-in hybrid vehicles are not fully electric, so they have been subject to road tax for several years already. Their rate depends on emissions, with plug-in hybrids paying less than standard petrol or diesel vehicles but more than fully electric cars. From April 2025, all hybrid vehicles, whether plug-in or self-charging, will continue to pay based on their CO₂ emissions under the same system as conventional cars.

What This Change Means for EV Buyers in the UK

For anyone planning to buy an electric car, the new road tax system means factoring in a small but consistent annual cost. While this may be disappointing for those who expected full exemption, the difference in cost is still relatively modest compared to savings made elsewhere.

For example, a driver switching from a petrol vehicle that costs £180 per month in fuel could save hundreds of pounds each year by charging an EV at home on a low overnight electricity tariff. Maintenance costs are typically 30 to 50 percent lower due to fewer moving parts and less mechanical wear. Even with road tax included, electric vehicles remain significantly cheaper to run overall.

This change may also influence how buyers view the used EV market. Vehicles registered before April 2017 remain in the lowest tax brackets, which could make them more attractive to cost-conscious buyers, provided their battery health and range remain strong.

Misconceptions About EV Road Tax

A common misconception is that electric cars are still completely tax-free, but this is no longer the case. From April 2025, nearly all electric cars in the UK will be subject to Vehicle Excise Duty. Another myth is that this makes electric vehicles less economical, but when all costs are considered, they remain far more affordable to run than petrol or diesel cars.

Some drivers also believe that paying road tax for EVs is unfair because they help reduce pollution. However, the government’s position is that as electric cars become mainstream, every vehicle on the road should contribute to the cost of maintaining and improving transport infrastructure.

Are Any Electric Cars Still Exempt?

There are very few exceptions to the rule. Vehicles registered before March 2001, those in special tax classes such as disabled use, or certain classic cars may still qualify for exemption. However, the vast majority of modern electric cars will pay VED under the new system. The rules apply equally to both private and company-owned EVs.

Future of Vehicle Taxation in the UK

Looking ahead, the government is likely to continue refining its approach to vehicle taxation. With fuel duty income falling, there has been growing discussion around new systems such as road pricing or mileage-based taxation. Such systems could replace or supplement traditional VED, ensuring that revenue keeps pace with the rapid transition to electric transport.

At the same time, incentives for cleaner driving are expected to remain in place. This includes potential tax breaks for vehicles using renewable energy, low-cost off-peak charging tariffs, and reduced fees in congestion or low-emission zones. The long-term aim is to balance environmental progress with economic sustainability.

Frequently Asked Questions

Do electric cars pay road tax in the UK?

Yes, from April 2025 all electric cars will pay Vehicle Excise Duty, starting at £10 for the first year and £190 per year after that.

Are older electric cars still exempt?

Only a small number of older EVs registered before March 2017 remain in the lowest tax brackets, usually paying around £20 per year.

Does the price of the car affect how much tax I pay?

Yes. Electric vehicles with a list price over £40,000 when new must pay an additional £390 per year for five years.

Will this make electric cars less affordable?

Not necessarily. While road tax adds a small cost, EVs still save money through cheaper fuel, less maintenance, and other incentives.

Can I still benefit from other EV savings?

Yes. Electric cars remain exempt from London’s congestion charge and other clean air zone fees, and they often qualify for cheaper parking and charging schemes.

Conclusion

Electric cars in the UK are no longer completely free from road tax, but the new system is designed to be fair and consistent across all types of vehicles. From April 2025, EVs are taxed at the same standard rate as petrol and diesel models, with only the most expensive cars paying an additional supplement.

For drivers, this marks the end of one of the early incentives for switching to electric power, but it does not change the fact that EVs remain cleaner, cheaper, and more efficient to run overall. When compared with savings on fuel, maintenance, and emissions charges, road tax is a small price to pay for the long-term benefits of electric driving.

For anyone considering making the switch, the best approach is to budget for the annual tax while focusing on the much greater financial and environmental advantages electric cars continue to offer.