Vehicle Excise Duty (VED), or car tax, is a fee for driving on UK roads. It’s usually based on CO₂ emissions, with higher polluting cars paying more.
From April 2025, electric vehicles (EVs) will no longer be exempt. The government says this will make tax fairer as more people switch to EVs. But what does this mean for you? Let’s break it down in simple terms.
How much will I pay under the new VED rules?
Road tax for cars registered between 1 March 2001 and 31 March 2017
If your car was registered between these dates, it falls under the older VED system, where the tax rate is based on CO₂ emissions. Here’s the tax rate structure:
| VED Band | CO₂ Emissions (g/km) | Annual Rate |
| A | Up to 100g/km | £0 |
| B | 101-110g/km | £20 |
| C | 111-120g/km | £35 |
| D | 121-130g/km | £160 |
| E | 131-140g/km | £190 |
| F | 141-150g/km | £210 |
| G | 151-165g/km | £255 |
| H | 166-175g/km | £305 |
| I | 176-185g/km | £335 |
| J | 186-200g/km | £385 |
| K | 201-225g/km | £415 |
| L | 226-255g/km | £710 |
| M | Over 255g/km | £735 |
Electric Vehicle (EV) Tax Rates from 2025
Previously, EVs were exempt from road tax, but from April 2025, they will be taxed under the following system:
| Vehicle Type | First-Year Rate | Standard Rate (After Year One) |
| EV | £10 | £195 |
| EV (Above £40,000) | £10 + £425 (Expensive Car Supplement) | £195 + £425 for 5 years |
Expensive Car Supplement: If your car costs more than £40,000, you’ll pay an extra £425 per year for five years. This includes high-end EVs like Teslas.
Want to see the official car tax rates? Check out the latest VED rates on the DVLA website to stay up to date.
What does this mean for electric car owners?
If you own an EV, you’ll start paying car tax for the first time. While the £195 annual rate is still lower than petrol and diesel cars, some owners feel this goes against government incentives for going electric.
For those driving older EVs registered before April 2017, there’s good news – they remain exempt from tax.
The Society of Motor Manufacturers and Traders (SMMT) predicts EV sales will still grow by 21.4% in 2025, reaching 462,000 units, but this is below the 28% target (SMMT).
Should I buy an EV now or wait?
Buying before April 2025 lets you avoid new VED rates for longer, while waiting means you’ll pay £195 annually from year two. EVs still have lower running costs, and manufacturers are offering discounts—some up to 28%. Used EV prices have dropped by 50%, making them more affordable. However, government tax changes could slow adoption, and expensive EVs (£40,000+) will face a £425 yearly supplement. If you plan to keep your EV long-term and want tax savings, buying before April 2025 is the smarter choice. (Scottish Sun, SMMT).
Note: These insights are based on current policies and projections as of 2025. Always check for updated regulations before making a decision.
How do these new tax rates affect used cars?
- Older petrol and diesel cars with high CO₂ emissions might lose value as buyers try to avoid high tax rates.
- Used EVs (before 2017) might become more popular since they stay tax-free.
- More affordable EVs could enter the market as manufacturers adjust pricing to offset new tax rules.
According to market insights, the value of used EVs has dropped by up to 50% in some cases, making second-hand electric cars an appealing option for buyers looking to avoid high costs.
What do people think about these changes?
Public reaction has been mixed. Many EV owners are frustrated, saying they bought electric cars to save money and help the planet. Now, they feel like they’re being penalised.
On the other hand, petrol and diesel drivers are saying, “Welcome to the club, EV folks!” Some argue that since more people drive EVs now, it’s only fair that they contribute to road taxes too.
Fleet operators are also rethinking their strategy. Businesses that rely on EVs might need to reassess their costs and budgets as road tax becomes an added expense.
Will this slow down the switch to electric cars?
Some experts think these tax changes could make people think twice before going electric. The Society of Motor Manufacturers and Traders (SMMT) warns that adding tax to EVs could slow down adoption rates just as more drivers are considering making the switch.
However, the government believes this change is necessary to make the tax system fairer and maintain road funds.
What should you do next?
- If you already own an EV, prepare for VED from 2025.
- If you’re buying a new car, check tax rates before deciding.
- If you drive an older petrol or diesel car, be aware that higher-emission models may cost more in tax over time.
Need to pay or renew your car tax? Tax your vehicle online in just a few clicks!
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Final thoughts
The 2025 VED changes are a big deal, especially for EV owners. While road tax for electric cars is still lower than for petrol and diesel models, this shift could make some people rethink their choices.
And let’s be real – no one likes paying more tax. But if you’re an EV owner, at least you can still smugly drive past petrol stations knowing you’re not spending £90 to fill up!
The best thing you can do? Stay informed and choose a car that fits your budget and lifestyle. Whether you go electric or stick with petrol, knowing the costs ahead of time will help you make a smarter decision.
