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New Rules for Road Tax on EVs: How Will This Impact Drivers?

EV owners in the UK are currently free from paying any road tax fees - a huge bonus for driving on green energy. However, as of 1st April 2025, this is all set to change. But how will this impact your motoring costs? Read ahead for everything you need to know.

The decision has been made to make the British motoring tax system ‘’fairer’’ for all. While lower motoring costs is one of the many benefits of switching to 100% green energy, continuing with the no tax on EV scheme would result in a significant loss in public spending.

Because the Office of Budget Responsibility forecast half of all new vehicles will be electric by 2025, to make our motoring tax system fairer I’ve decided that from then electric vehicles will no longer be exempt from vehicle excise duty.

Chancellor Jeremy Hunt told the Commons

Scrapping the exemptions will also support the UK’s funding in moving to electric - with 2035 seeing a ban on all new petrol and diesel cars on sale in the UK.

It’s worth noting that these changes will apply to all electric cars, vans, and motorcycles - including those for individual or company fleets.

Curious to know how much this will impact you?

Keep reading for all the key facts, so that you can be well prepared for the road ahead. 

Also referred to as ‘Vehicle Tax Duty (VED)’ or ‘car tax’, road tax is a yearly payment charged on all motor vehicles being driven or parked on public roads. The government uses this revenue to contribute to the maintenance and growth of the UK road infrastructure - from improving traffic flow to implementing more EV charge points for the public. Any driver will be pretty familiar with this, as it needs to be renewed every 6-12 months.

Currently, no. The tax fee is depending on emissions levels and how much a vehicle is impacting climate change. So, those driving a petrol guzzling wheeler can expect to pay significantly more. Pure EVs, on the other hand, pay absolutely nothing because they emit zero CO2. Also known as ‘zero rated’ - a big win for EV drivers.

Correct. This exemption will come to end after April 1st 2025, any newly registered EVs will pay VED. The good news is that for the first year, this will be based on the lowest first year rate - setting back drivers by £10 every year. This will then rise to the standard rate of road tax of £180 in the second year of registration.

Want to know more about how this will impact you?

Here’s a summary of what the changes look like:

  • Any EVs registered on or after 1/4/25 will need to pay the lowest first year rate of VED of £10.
  • From the second year, this will change to the standard rate of £180 per year.
  • This standard rate will also apply to any zero emission cars that were registered between 1/4/17 to 31/3/25.
  • The Expensive Car Supplement for EVs will also be scrapped come 2025, impacting models listed above £40,000. 
  • Zero and low emission cars (electric and hybrid) registered between 1/3/01 and 30/3/17 in Band A will transition to the Band B rate, which is £20 per year.
  • As for electric van owners, they will be required to pay the same rate as petrol or diesel light goods - which is £290 per year. 
  • Electric motorcycles or bikes will only need to pay for their small engines, which is set at £22 per year. 
  • Any rates for Alternative Fuel Vehicles or hybrids will level out to meet the standard rates.

Despite this, the incentives created to support businesses in switching to electric will be staying. Hunt said, “Company car tax rates will remain lower for electric vehicles … and I will limit rate increases to 1% a year for three years from 2025.” So, if you’re a business leader looking to transition your fleets to electric, you can still expect to make great cost and carbon savings. 

Learn more about our salary sacrifice scheme here

What benefits are there for electric car users in the UK?

  • Zero carbon impact

    Pure EVs have zero emissions, making them the most environmentally friendly form of transport available. You can play your part in net zero simply by making the switch. 

  • Reduced running costs

    As well as being cheaper to charge (when compared to petrol and diesel), EVs have fewer moving parts - meaning lower maintenance costs.

  • Fun to drive

    Smooth, comfortable, and high-performing, EVs provide an all-round better driving experience to make each trip as enjoyable as the last. 

  • Access to government grants

    The UK government currently offers several grants to support the UK charging infrastructure - and this is all set to expand. Check out the schemes here. 

  • Future-forward technology

    As the EV revolution continues to evolve in preparation for the 2030 petrol and diesel ban, so do the advances in technology. There’s no better time to make the switch. 

  • Free parking in various places

    Many UK car parks offer free spaces designated specifically for EVs, most of which have charge points for you to power up while on the go.

  • Quieter on the roads

    Reduced noise allows for a better driving experience, so you can enjoy your vehicle and the journey it takes you on.

Why wait to join the EV revolution?

Here at DriveElectric, we’re supporting thousands of trusted customers in making their switch to electric. Our flexible leasing services mean we can work with you and individual your needs - and our friendly team of experts are here to guide you through every step of the journey. 

Contact us today to get on the road to net zero, faster.
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