From April 2026, electric cars will pay Vehicle Excise Duty (VED, often called road tax) for the first time. If you’ve been putting off understanding exactly what this means for your wallet, here’s the full breakdown with real numbers and real cars.
The Basic Rate: What Most EV Drivers Will Pay
From the second year of ownership onwards, most electric car owners will pay £195 per year (based on current rates, which typically rise slightly with inflation each April). That’s about £16.25 per month.
This applies to any EV registered from 1 April 2025 onwards with a list price under £40,000. So if you buy a base model MG4, Ora Funky Cat, or Volkswagen ID.3 in 2025, you’ll pay nothing in the first year, then £195 annually from year two.
For context, a new petrol or diesel car pays a first year rate based on CO2 emissions (ranging from £10 to £2,745), then the same £195 standard rate from year two. The policy change removes EVs’ exemption, but it doesn’t penalise them beyond what conventional cars pay.
The Expensive Car Supplement: Where It Gets Costly
Here’s the bit that catches people out. Any car with a list price of £40,000 or more, including factory-fitted options, pays an additional £425 per year on top of the standard rate. That’s called the expensive car supplement, and it applies from years two to six of the vehicle’s registration.
So if you buy a Tesla Model Y Long Range (list price around £51,990 at the time of writing), here’s what you’ll actually pay:
Year 1: £0
Years 2 to 6: £620 per year (that’s £195 standard rate plus £425 supplement, or about £52 per month)
Year 7 onwards: £195 per year
Over the first ten years of ownership, that’s £3,295 in total VED.
Real Examples Across Different Price Points
Let’s look at what you’d pay over five years of ownership (years two to six, the most expensive period) for some popular models:
MG4 SE (£26,995 list price):
Total VED years 2-6: £975 (£195 × 5 years)
Kia Niro EV (£39,995 list price):
Total VED years 2-6: £975 (just sneaks under the £40,000 threshold)
Hyundai Ioniq 5 Premium (£46,745 list price):
Total VED years 2-6: £3,100 (£620 × 5 years)
Polestar 2 Long Range Dual Motor (£49,950 list price):
Total VED years 2-6: £3,100 (£620 × 5 years)
Mercedes EQE 350+ (from £69,000 list price):
Total VED years 2-6: £3,100 (same as any other car over £40,000)
The Detail Everyone Forgets: When the Supplement Ends
The expensive car supplement only applies for five years, specifically from the second time the vehicle is taxed until the end of the sixth year of registration. From year seven onwards, you’re back to the standard £195 annual rate, regardless of what the car cost when new.
This matters if you’re buying a nearly new premium EV. A three-year-old Audi e-tron registered in 2025 would only have two years of the expensive car supplement left, not five. If you’re shopping for used EVs from 2027 onwards, check the registration date and work out how many years of the supplement remain.
How This Compares to Petrol and Diesel
A new petrol BMW 3 Series 320i M Sport (list price around £45,000) pays £220 in first year VED based on its CO2 emissions, then £620 per year for the next five years due to the expensive car supplement, then £195 annually thereafter. Almost identical to a similarly priced EV from 2026, except for that lower first year rate.
The gap has narrowed significantly. EVs no longer have a VED advantage from year two onwards.
What You Need to Do
If you’re ordering an EV now for delivery in 2025 or later, factor VED into your running costs. For most people, that’s an extra £195 per year. If you’re considering a car close to the £40,000 threshold, check whether removing a few options keeps you under that line. Dropping from £40,500 to £39,900 saves you £2,125 over five years.
And if you’re buying used from 2027 onwards, ask when the car was first registered and calculate how many years of the expensive car supplement remain. It could be the difference between £620 and £195 per year.