How Much Will Electric Car Tax Be in 2025

For many years in the UK, owning a fully electric car meant enjoying a tax-free advantage. Because electric vehicles produced no tailpipe emissions, they were exempt from Vehicle Excise Duty, commonly known as road tax. However, from April 2025, the government is changing this policy. The exemption will end, and all electric vehicles will become part of the standard Vehicle Excise Duty system.

This change marks a significant shift for UK drivers. It means that even zero-emission cars will start contributing to the upkeep of the country’s road infrastructure. For those planning to buy an electric car, renew a lease, or budget for ownership costs, it is important to understand what these changes mean in practical terms.

Overview of the 2025 Tax Changes

From 1 April 2025, zero-emission vehicles will no longer be exempt from paying Vehicle Excise Duty. Instead, electric cars will be taxed in a similar way to petrol and diesel models. This applies to both new and existing vehicles, although the exact amount you’ll pay will depend on when your car was registered and its original list price.

For electric cars registered on or after 1 April 2025, there will be a first-year rate of £10. From the second year onwards, the standard annual rate of £195 will apply. This rate brings EVs in line with the majority of petrol and diesel cars currently on the road.

For electric vehicles registered between 1 April 2017 and 31 March 2025, owners will pay a flat annual rate of £195. Older electric cars registered between 1 March 2001 and 31 March 2017 will fall into a lower band, paying £20 per year.

There is also an additional charge called the “expensive car supplement.” If your vehicle has a list price of £40,000 or more when new and is registered on or after 1 April 2025, you’ll pay an extra £425 a year from years two to six. This means that for those years, the total annual tax will be £620. After the sixth year, the rate drops back down to the standard £195 per year.

What the New Rates Mean for Electric Car Owners

These changes mean that most electric car owners will face new annual running costs for the first time. For drivers who have been used to paying zero road tax, this will be a noticeable adjustment. However, even with the new rates, electric cars remain cheaper to run overall when fuel and maintenance costs are taken into account.

For a typical driver with a new electric car registered after April 2025, the first-year tax of £10 is minimal. From the second year, paying £195 annually is a manageable cost compared with the fuel savings most drivers make by switching to electric. For owners of premium electric vehicles priced above £40,000, the additional £425 supplement brings the total annual cost to £620 for years two through six. While that is a significant increase, it mainly affects luxury models such as Teslas or high-end electric SUVs.

If you currently own an electric car registered between 2017 and 2025, you will also begin paying £195 per year starting from April 2025. Older EVs, such as early Nissan Leafs or Renault Zoes registered before 2017, will continue to benefit from a much lower £20 annual rate.

Why the Government Is Introducing This Change

The decision to tax electric vehicles is based on several factors. Firstly, as the number of EVs on UK roads continues to grow, the government’s revenue from fuel duty is declining. Road tax helps ensure all drivers contribute to road maintenance and infrastructure funding, regardless of fuel type.

Secondly, this change aims to make the system fairer between EV and petrol or diesel drivers. While electric cars will still enjoy much lower running costs, they will no longer have a complete tax exemption. The move also helps stabilise government income as the transition to electric vehicles continues over the next decade.

What to Budget For

If you plan to buy an electric car in 2025, it’s wise to factor Vehicle Excise Duty into your running costs. For a car under £40,000, you’ll pay £10 in the first year and £195 per year after that. For cars priced at £40,000 or above, expect to pay £620 per year between the second and sixth years of ownership.

Used car buyers should check when their electric vehicle was first registered. If it falls between 2017 and 2025, you’ll start paying £195 per year from April 2025, even if the car was previously tax-free. For older EVs registered before 2017, the £20 annual rate still applies.

When buying or leasing a new EV, ask the dealer or leasing company how Vehicle Excise Duty will be handled. Lease providers often include the tax within the monthly payment, but it’s always best to confirm.

Frequently Asked Questions

Will all electric cars have to pay tax from 2025?

Yes. From April 2025, every fully electric car registered in the UK will be subject to Vehicle Excise Duty. The amount depends on when the car was registered and how much it originally cost.

Why is the government introducing tax on electric cars now?

As electric vehicles become more popular, the government needs to recover lost revenue from fuel duty and maintain fair contributions from all road users. The change ensures EV owners pay their share toward infrastructure upkeep.

Do plug-in hybrid cars also lose their tax benefits?

Yes. From 2025, plug-in hybrid and hybrid vehicles will no longer receive discounted VED rates. They will fall under the same tax system as fully electric cars and standard petrol or diesel vehicles.

Will older EVs remain cheaper to tax?

Yes. Electric cars registered before 1 April 2017 will continue to be taxed at the lower £20 rate because they fall into the pre-2017 emissions-based system.

Does the £40,000 threshold include optional extras?

Yes. The list price used to determine whether the expensive car supplement applies includes factory-fitted options and VAT, so it’s the total price of the vehicle when new, not what you actually paid.

What happens after six years if my car was over £40,000?

After the six-year period, the expensive car supplement no longer applies. From year seven onwards, you’ll pay the standard annual rate of £195, the same as other vehicles.

Conclusion

The introduction of electric car tax in 2025 marks the end of the tax-free era for zero-emission vehicles in the UK. From April 2025, most EV owners will pay Vehicle Excise Duty of £195 per year, while premium models with a list price above £40,000 will pay £620 per year between the second and sixth years. Although this adds a new annual cost, it is still relatively small compared to the long-term savings electric cars offer on fuel and maintenance.

For UK drivers, the message is clear: while EVs will no longer be completely tax-free, they remain one of the most economical and environmentally friendly ways to drive. With reduced fuel expenses, lower servicing costs, and access to zero-emission zones, the financial and practical benefits of owning an electric car still outweigh the modest new tax obligation.