Understanding Vehicle Excise Duty (VED) for Electric Vehicles
Vehicle Excise Duty (VED), commonly known as road tax, is a tax on vehicles used on UK roads. Historically, electric vehicles (EVs) were exempt from this charge, but from April 2025, EV owners are required to pay VED.
How Much You’ll Pay
The amount you pay depends on your car’s CO₂ emissions (zero for EVs), registration date, and list price. EVs registered on or after April 1, 2017, pay the standard annual rate of £195. Older EVs (registered between March 1, 2001, and March 30, 2017) pay £20 per year.
Newer EVs registered after April 1, 2025, pay £20 in the first year and £195 in subsequent years. If the vehicle’s list price exceeds £40,000, an additional ‘expensive car supplement’ of £425 applies from years 2 to 6, making the total £620 per year.
VED Rates for Electric Vehicles
Electric Vans and Plug-in Hybrids
Electric vans are subject to road tax but still offer lower running costs. Plug-in hybrid vehicles (PHEVs) now pay the same standard rates as petrol and diesel cars from April 2025.
Leasing and Road Tax
For Personal Contract Hire (PCH) or Business Contract Hire (BCH), the initial lease cost includes road tax at the applicable rate. If VED rates increase during the lease term, the funder will issue a one-off invoice for the additional cost.
Why Road Tax Was Introduced for EVs
The UK government removed the electric powertrain exemption to ensure fairness across vehicle types and compensate for lost fuel duty revenue as more drivers switch to EVs.
Key Points to Remember
- EVs registered after April 1, 2017, pay £195 annually
- Older EVs pay £20 per year
- New EVs registered after April 1, 2025, with a list price over £40,000 incur an additional £425 supplement from years 2 to 6
- Electric vans and PHEVs are also subject to road tax changes
By understanding these changes, EV owners can better plan their vehicle costs in the UK.
