Electric car tax will change in 2025 - how much will you pay and can you escape the rise?

The tax-free-ride electric cars have previous enjoyed is ending 1 April 2025, as they’re set to begin paying vehicle excise duty (VED). The government has closed that incentive as part of its multi-pronged effort to balance the nation’s books which now means EVs must pay electric car tax for the right to drive on UK roads.

All first-year car tax rates have been confirmed for 2025, and any electric car registered on or after 1 April 2025 will pay £10 for its first year on the road until the 2029-30 tax year. It’s also been confirmed that the old Band A (which is currently £0) will be removed. Vehicles in Band A will be recategorised into the first band where a rate becomes payable – usually Band B – which means £190 per annum from year two.

While this new charge is a little irritating for EV owners, it’s worth noting that electric cars will still pay the less road tax than their petrol- or diesel-powered counterparts for the first year of registration. The government has also raised the tax rates for combustion engine cars as well as vans and pickups in a move it says will ‘strengthen incentives’ for shifting towards electrified vehicles.

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The 2025 electric car tax VED changes detailed

From next year, all combustion cars (including hybrids) that emit between 1–50g/km of CO2 will now pay £110 for their first year on the road. That’s an increase of £100 over the current rate. Plus, the tax rates for any vehicle that emits more than 76g/km of CO2 will double over their current figures. For confirmation of exactly what you pay now, you can enter your registration number into our Car Tax Calculator.

The decision to make electric cars pay VED is an overhang from the previous government – but the current one has implemented it. The former Chancellor of the Exchequer, Jeremy Hunt, announced the change in his 2023 Autumn Statement. He said: ‘To make our motoring tax system fairer, I’ve decided that electric vehicles will no longer be exempt from vehicle excise duty.’ 

Chair of the Transport Committee, Huw Merriman MP, added: ‘It’s time for an honest conversation on motoring taxes. The government’s plans to reach net zero by 2050 are ambitious. Zero emission vehicles are part of that plan.’

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The Expensive Car Supplement changes explained

The government is changing the VED Expensive Car Supplement threshold for electric cars. It says it ‘recognises the disproportionate impact’ the scheme has on zero-emission vehicles, which are generally more expensive than their petrol-powered equivalents.

New electric and zero-emission vehicles registered on or after 1 April 2025, with the list price exceeding £40,000, will attract the standard rate of VED, plus the expensive car supplement for the first five years. The upshot is that owners of expensive electric cars car pay up to £600 per year in car tax.

Nicknamed the showroom tax, it was introduced in 2017, but the price threshold has remained static since then despite dramatic inflation. In fact, as of December 2024, that £40,000 figure translates to £52,457.91. A mid-spec Volkswagen ID.4 is just one of many electric cars that’ll be classed as luxury by the government as of April.  

Some manufacturers have even cut prices to avoid being slapped with the expensive car supplement. The Vauxhall Grandland Electric has come down in price to slip in below the supplement, and the base spec Tesla Model 3 will now set you back £39,995.

How to prevent your EV tax from going up?  

It is possible to beat the tax rise and enjoy one more year of tax-free motoring if you already own an EV. If you renew the tax on an EV by 31 March 2025 on the government’s website, the EV will still be classified in the Band A tax group. This cash-saving method was highlighted by Martin Lewis and would save you a £195 tax bill.

March 2025 is the final time you’ll be able to register an EV with a free first-year rate on VED. If you’re planning on buying an EV with a list price north of £40,000, pick it up before 31 March 2025 and you’ll save yourself five years of showroom tax. With the new 25 plate landing in the same month, March is traditionally a popular time to buy a new car, and with tax changes imminent, a clever time too.

What does the industry make of the change?

Nicholas Lyes, RAC head of policy, said of the changes: ‘After many years of paying no car tax at all, it’s probably fair the government gets owners of electric vehicles to start contributing to the upkeep of major roads from 2025. We don’t expect this tax change to have much of an effect on dampening the demand for electric vehicles given the many other cost benefits of running one.’

The prospect of introducing VED for electric cars is controversial. Since the government withdrew the Plug-in Car Grant, free road tax has become the last remaining financial benefit for private buyers making the switch to an electric car.

But VED raises billions of pounds each year – and the government needs to maintain income in the face of falling revenues from the sale and use of petrol and diesel cars. As electric cars will become far more common as we head towards the 2030 ban on new petrol and diesel cars, maintaining their exemption from VED has been judged unsustainable.

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