From 1 April 2025, electric vehicles will no longer be exempt from Vehicle Excise Duty (VED), the annual tax most of us still call road tax. If you’re driving an EV, you’ll be paying £195 per year for the first time. And if your car had a list price over £40,000 when new, you’ll be paying significantly more.
Here’s what the changes actually mean for your bank account, and whether there’s any point rushing to register a vehicle in the next ten days.
The Basic Charge: £195 Per Year
From April, all electric vehicles registered after 1 April 2017 will pay the standard VED rate of £195 annually. That’s about £16.25 per month, roughly the cost of two fancy coffees or one very large one.
For context, petrol and diesel cars already pay this rate from their second year onwards. The actual first-year rate for combustion engines varies wildly based on CO2 emissions, from £10 for the cleanest petrols to £5,490 for vehicles emitting over 255g/km, but that’s irrelevant if you’re comparing like-for-like running costs on cars you already own.
The Expensive Car Supplement: £425 Extra for Five Years
Here’s where it gets expensive. If your EV had a list price over £40,000 when new, including any factory-fitted options but excluding the old plug-in car grant if you received one, you’ll pay an additional £425 per year for five years. That’s the “expensive car supplement”, and it applies from the second time the vehicle is taxed.
This means you’ll pay £620 per year (£195 + £425) for years two through six of ownership. That’s £51.67 per month, or £3,100 over those five years.
The supplement catches out more EV buyers than you might expect. A base Tesla Model Y Long Range, at around £51,990, triggers it. So does a Kia EV6 GT-Line AWD at approximately £50,945. Even a well-specced MG4 Trophy Extended Range can creep over the threshold once you’ve added metallic paint and a few options.
Five-Year Cost Calculator
Let’s look at what you’ll actually pay over five years for an EV registered on or after 1 April 2025, assuming you tax it annually rather than monthly:
For an EV under £40,000 list price:
Year 1: £10 (first year rate for zero emission vehicles)
Years 2-5: £195 × 4 = £780
Total: £790, or £158 per year average
For an EV over £40,000 list price:
Year 1: £10
Years 2-5: £620 × 4 = £2,480
Total: £2,490, or £498 per year average
After year six, the expensive car supplement drops off and you’re back to £195 annually regardless of the original list price.
Should You Rush to Register Before 1 April?
If you’ve already bought an EV and it’s sitting at the dealer waiting for registration, yes, getting it registered before 1 April saves you money. You’ll avoid VED entirely for as long as you own it under the current rules.
But should you rush to buy an EV in the next ten days just to dodge the tax? Almost certainly not.
Even for a £50,000 EV where you’d save £2,490 over five years, that’s unlikely to outweigh the discount you could negotiate by not being a desperate buyer with a ten-day deadline. The savings also pale compared to other EV ownership variables. Switch from charging on a standard rate of 24p per kWh to an EV-specific overnight tariff at 7p per kWh, and you’ll save roughly £600 per year on a typical 10,000-mile annual mileage. That’s more than the annual VED cost.
Company car drivers on salary sacrifice schemes should definitely not rush. The Benefit-in-Kind rate for EVs remains 2% for 2025/26, making them vastly cheaper than combustion equivalents even with VED added. Your employer’s scheme will factor the VED into the monthly cost either way.
What About Used EVs?
If you’re buying a used EV that was registered before 1 April 2025, it stays exempt from VED. The rules follow the vehicle, not the owner. A 2024-registered Tesla Model 3 will never pay road tax, even if you buy it in 2027.
This might create a price premium for pre-April 2025 EVs in the used market, though how much remains to be seen. The £790 to £2,490 five-year saving could be worth something, but it’s a one-time policy change, not an ongoing advantage that increases with vehicle age.
Check Your Vehicle’s List Price
If you own an EV and you’re not sure whether it crosses the £40,000 threshold, check the V5C logbook. The list price should be shown, including factory-fitted options. You can also contact the manufacturer or check your original purchase invoice.
The list price is what matters, not what you actually paid. If you negotiated a £5,000 discount on a £42,000 car, you still pay the expensive car supplement. Similarly, if you bought used, it’s the original new price that counts, not what you paid the previous owner.
The DVLA will write to registered keepers explaining what they’ll pay before the first payment is due, but it’s worth knowing in advance so you can budget accordingly. These figures are based on rates confirmed by the Treasury for 2025/26 and may change in future years, so verify current rates when your payment is due.