Electric vehicles lost their free pass on road tax in April 2026. If you’re driving an EV registered after that date, you’ll now pay £190 per year in Vehicle Excise Duty (VED, the tax formerly known as road tax). That’s about £16 per month, which might sound modest, but it’s worth understanding exactly what this means for your running costs and whether EVs still stack up financially against petrol and diesel alternatives.
What EV Owners Now Pay
The new structure is straightforward for most EV drivers. From the second year of ownership onwards, you’ll pay the standard rate of £190 annually. In the first year, the rate is still zero because EVs produce no CO2 emissions, and first-year rates are based on emissions bands.
There’s one significant exception: the expensive car supplement. If your EV had a list price over £40,000 when new, you’ll pay an additional £425 per year on top of the £190 standard rate. That’s £615 total, or about £51 per month, for years two through six of the vehicle’s life. From year seven onwards, you drop back to the standard £190.
This supplement catches more EVs than you might expect. A Volkswagen ID.4, Kia EV6, or Tesla Model Y all comfortably exceed that £40,000 threshold in most trim levels. Even a MG4 Trophy tips over the line once you’ve added a few options.
How This Compares to Petrol and Diesel
Here’s where the picture gets interesting. Petrol and diesel cars registered from April 2017 onwards also pay £190 per year as their standard rate (from year two onwards). The expensive car supplement applies identically: £615 total for cars over £40,000.
In other words, at the time of writing, EVs and conventional cars pay exactly the same VED rates after the first year. The only difference is that first year: petrol and diesel cars pay a CO2-based rate that ranges from £10 for the cleanest models up to £2,745 for cars emitting over 255g/km. EVs still pay nothing in year one.
Let’s take a practical example. You’re choosing between a Tesla Model Y Long Range (list price around £52,000) and a BMW X3 xDrive30i petrol (similar price). The Tesla pays zero in year one, then £615 annually for years two through six, then £190 from year seven. Total VED over seven years: £3,265.
The BMW pays £600 in year one (based on 170g/km CO2), then £615 annually for years two through six, then £190 from year seven. Total over seven years: £3,865. The difference is £600 over seven years, or about £86 per year. Material, but hardly transformative.
Do EVs Still Make Financial Sense?
The VED change nibbles at the EV cost advantage, but it doesn’t fundamentally alter the arithmetic. The real savings remain in fuel costs and, for company car drivers, in benefit-in-kind tax.
Taking that Tesla versus BMW comparison further: if you’re covering 10,000 miles annually, you’ll spend roughly £450 charging the Tesla at home on an off-peak tariff (based on 7p per kWh and 3.5 miles per kWh). The BMW will cost around £1,800 in petrol (at 40mpg and £1.45 per litre). That’s a £1,350 annual difference, or about £113 per month, which rather dwarfs the £86 annual VED difference.
For company car drivers, the benefit-in-kind calculation remains heavily weighted towards EVs. That same Model Y costs a 40% taxpayer about £210 per month in BIK (based on 2% of list price). The BMW X3 would be around £1,040 per month (based on 32% of list price for its emissions band). The VED cost is irrelevant when the BIK difference is nearly £10,000 per year.
What You Need to Know
Check whether your EV crosses the £40,000 list price threshold. This is the price when new, including VAT and factory-fitted options, but excluding first registration fee and VED. Your V5C logbook shows this figure. If you’re buying used, the supplement still applies based on the original list price.
The DVLA should send you a reminder when your VED is due, but you can check and pay online at gov.uk. You can pay annually (£190 or £615 depending on your circumstances), or set up a Direct Debit to spread the cost monthly, though this includes a 5% surcharge.
For most private buyers, EVs remain cheaper to run overall once you factor in fuel costs. The £190 VED doesn’t change that equation significantly. For company car drivers, the tax advantages remain overwhelming despite the new road tax. What has changed is that EVs are no longer exempt from this particular cost. They’re now on a level playing field with conventional cars for VED purposes, which seems to be exactly what the Treasury intended.