From April 2025, electric vehicles registered from that date will start paying Vehicle Excise Duty (VED), commonly known as road tax, for the first time. The rates kick in properly from April 2026, and they’re not trivial. If you’re considering an EV, here’s exactly what you’ll pay and how it compares to petrol and diesel alternatives.
The Basic Rate: What Every EV Will Pay
From the second year of ownership onwards, all electric vehicles will pay the standard rate of VED. Based on current rates, that’s £195 per year, or about £16.25 per month. This is the same rate paid by petrol and diesel cars, so EVs lose their exemption but don’t pay a premium.
In the first year, new EVs registered from April 2025 will pay £10. It’s a token amount, really, barely worth the administrative effort.
The Expensive Car Supplement: Where It Gets Painful
Here’s the bit that hurts. Any EV with a list price over £40,000 when new will pay an additional £425 per year on top of the standard rate. That’s called the Expensive Car Supplement (ECS), and you pay it for five years, from years two to six of the vehicle’s life.
So for those five years, you’re paying £620 per year in total (£195 standard rate plus £425 supplement), which works out to about £52 per month. After year six, you drop back to the standard £195 annually.
This matters because £40,000 doesn’t buy you a luxury EV anymore. It buys you a mid-range family car.
Real Examples: Popular EVs and What They’ll Cost
Let’s look at some actual models and what owners will pay over a typical seven-year ownership period.
MG4 SE (£26,995 list price)
\p>This one stays under the threshold. You’ll pay £10 in year one, then £195 annually for years two to seven. Total over seven years: £1,180, or about £14 per month averaged out.
Kia Niro EV (from £36,795)
The base model squeaks under the limit. Same as the MG4: £1,180 over seven years. But spec it up with a few options and you’ll tip over £40,000, which brings us to the next category.
Tesla Model 3 Rear-Wheel Drive (£39,990 at time of writing)
Tesla has clearly done its homework on pricing, but add anything, literally anything, and you’re over. If you do cross £40,000, here’s what you pay: £10 in year one, £620 annually for years two to six (that’s £3,100), then £195 in year seven. Total: £3,305 over seven years, or about £39 per month.
Volkswagen ID.4 (from £44,915)
Firmly in expensive car territory. Same calculation as above: £3,305 over seven years. That’s an extra £2,125 compared to the MG4, purely because of the list price threshold.
Polestar 2 Long Range Single Motor (£44,950)
Same again: £3,305 over seven years. And yes, you pay the supplement even if you buy the car used. If you buy a three-year-old Polestar 2 in 2028, you’ll still pay the £620 rate for years four, five and six of its life, because it’s based on the original list price when new, not what you paid for it.
How This Compares to Petrol Cars
The standard rate is identical, but petrol and diesel cars pay much more in year one. A new petrol Volkswagen Golf with CO2 emissions of around 120g/km would pay approximately £220 in first-year VED (rates vary by exact emissions), compared to the EV’s £10.
The Expensive Car Supplement works the same way for all fuel types. A £45,000 petrol BMW 3 Series pays the same £425 annual supplement as a £45,000 Polestar 2.
So EVs still have a small advantage in year one, but from year two onwards, you’re paying the same. The financial gap has narrowed considerably.
What About EVs Registered Before April 2025?
They remain exempt. If you registered your EV in March 2025 or earlier, you’ll continue paying nothing for as long as you own it. This has created a rather obvious incentive to buy before the deadline, and dealers know it.
The Three-Year Ownership Calculation
If you’re on a typical three-year lease or PCP, you’ll pay £10 in year one, then £195 in years two and three if you’re under £40,000. That’s £400 total, or about £11 per month built into your budget.
Over £40,000? It’s £10 in year one, then £620 in years two and three. That’s £1,250 total, or roughly £35 per month. Not enough to make or break a car purchase decision for most people, but enough to notice.
What This Means for Your Next EV
The £40,000 threshold is the critical number. If you’re looking at cars hovering around that price, it’s worth seeing whether a lower trim or fewer options keeps you under the limit. On a typical ownership period, staying below £40,000 saves you £2,125 in VED.
For company car drivers, this doesn’t change much. You’re still paying 2% Benefit-in-Kind tax on EVs (at the time of writing), which remains dramatically lower than petrol equivalents. The VED is paid by whoever’s name is on the V5C, which is usually your employer if it’s a company car, though some salary sacrifice schemes pass the cost to you, so check your agreement.
One practical tip: if you’re buying used, check the original list price, not just the price you’re paying. A three-year-old EV that cost £45,000 new still triggers the Expensive Car Supplement for the remainder of its first six years, even if you’re buying it for £25,000 now. The V5C will show the original list price, or you can check historic price lists online.