If you're driving an electric vehicle (EV) or thinking about making the switch, you’ll want to be across the upcoming changes to the electric car tax in 2025. From April 2025, the UK government is introducing Vehicle Excise Duty (VED) on EVs for the first time.
Whether you manage a fleet or just want to keep costs down on your daily commute, this guide breaks down what’s changing, how much it could cost you, and how to stay ahead of the curve.
Thinking about switching to EVs for your business? Learn more about our EV charge card solutions.
What Is EV Road Tax?
Until now, fully electric vehicles haven’t had to pay road tax—one of the perks of choosing an electric vehicle over traditional fuel. But from April 1st, 2025, that changed. The government is rolling out VED on electric cars to create a fairer system across all vehicle types.
In other words? Electric vehicles will soon be treated the same as petrol and diesel cars when it comes to tax.
How Much Will Electric Vehicle Car Tax Be in 2025?
This depends on when your EV was first registered. Here’s a quick overview of what you’ll pay:
- EVs registered before April 1st 2025, will move onto the standard VED rate of £195 a year.
- EVs registered on or after 1st April 2025:
- Year 1: You’ll pay a first-year rate of £10.
- Year 2 onwards: The same standard £195 annual rate applies.
- Got a vehicle worth over £40,000? You’ll also be hit with a luxury car supplement of £425 per year, on top of the standard rate, for five years.
So, how much will your electric car tax be in 2025? For most EV drivers reading this guide, you can expect to pay around £195 per year unless your car falls into the higher-value bracket.
How Will VED for Electric Cars Work?
From April, EV drivers will follow the same process as anyone else when it comes to tax:
- You can pay online, over the phone, or at a Post Office.
- Payment options include monthly, every six months, or annually.
- What if you miss a payment? The DVLA can track that automatically using number plate recognition.
In short, VED for electric cars works just like any other car tax.
What Does This Mean for EV Drivers?
It’s a shift, but it doesn’t mean EVs are suddenly more expensive overall. Even with EV road tax 2025 kicking in, electric vehicles still come out ahead in many ways:
- Charging is cheaper than fuel (especially with the right supplier or EV charge card).
- Maintenance costs are lower thanks to fewer moving parts.
- You’ll still save on things like ULEZ charges, congestion zones, and potentially parking too.
Bottom line: Electric vehicles are still a smart choice for drivers and businesses alike.
Are There Any Exemptions?
Yes, some. You might still avoid the electric car tax in 2025 if:
- You receive disability-related benefits and qualify for exemption.
- Your EV is over 40 years old and considered a ‘classic’—in which case it’s tax-free (though these will be very few and far between!).
Not sure where you stand? Always check the official GOV.UK guidance to be sure.
Why Are These VED Changes Happening?
As EV adoption grows, the government is working to make it fairer and more sustainable by aligning it with traditional fuel, lessening the electric vehicle incentives we’ve always seen previously. These VED changes also help balance out the loss of fuel duty revenue, which has long supported road maintenance and infrastructure.
So while it might feel like a bit of a blow, it’s part of a bigger move toward modernising the system.
Other Ways Going Electric Keeps Costs Down
Even with tax on the table, EVs offer other savings that still tip the scales:
- Salary sacrifice schemes can cut costs for company car drivers.
- EV charge cards simplify charging admin, offer fixed rates, and help reduce overall costs.
- For those driving EVs for work purposes, home charging reimbursement
makes EV fleet management simpler than ever by sending reimbursements directly to home energy providers.
For more ways to make your fleet greener, see our fleet fuel solutions.
Final Thoughts
Yes, VED for electric cars is coming—but that doesn’t take away from the long-term value of going electric. With rising fuel prices, clean air zones, and more affordable EV tech, it still makes financial sense for most fleets.
Want help staying ahead of the changes? We’re here to make the switch simpler, from choosing the right EV charge card to setting up smart home reimbursement for EVs.
