From 1st April 2025, the three-year exemption is over. EVs registered from that date pay Vehicle Excise Duty (VED, or road tax) just like petrol and diesel cars. Here’s what that actually costs in pounds and pence, based on the scenarios we’re asked about most often.
The Basic Rules From April 2025
\p>EVs registered from 1st April 2025 pay £10 in their first year (the showroom tax, technically called the ‘first year rate’), then the standard rate every year after. At current rates, that’s £190 per year, or about £15.83 per month.
There’s one significant exception: the expensive car supplement. If your EV has a list price over £40,000, you pay an additional £410 per year (that’s on top of the £190 standard rate) for five years, starting from the second time the vehicle is taxed. After those five years, you drop back down to the standard rate.
EVs registered before 1st April 2025 remain exempt from VED entirely, which is why you’re seeing some fairly aggressive pre-registration offers from dealers at the moment.
Scenario One: New EV Under £40,000
Let’s say you buy a new Vauxhall Corsa Electric (£36,705 list price at the time of writing) in May 2025.
Year one: £10. Year two onwards: £190 per year.
Over five years, that’s £770 total, or about £154 per year on average. Over ten years, it’s £1,720 total.
For comparison, a petrol Corsa registered in May 2025 would pay £220 first year rate (based on CO2 emissions of 109g/km), then £190 per year after. Five-year total: £980. The EV saves you £210 over five years, though that’s hardly the compelling financial argument it once was.
Scenario Two: New EV Over £40,000
Now let’s say you buy a Tesla Model Y Long Range (£51,990 list price) in May 2025.
Year one: £10. Years two to six: £600 per year (£190 standard rate plus £410 expensive car supplement). Year seven onwards: £190 per year.
Over five years, that’s £2,410 total, or £482 per year on average. That’s £40.17 per month if you think in monthly budgets. Over ten years, it’s £3,770 total.
A petrol equivalent, say a BMW X3 at a similar price point, would pay around £2,745 first year (214g/km emissions), then £600 per year for years two to six, then £190 after. Five-year total: £5,145. The EV still saves you £2,735 over five years on VED alone, though the gap narrows considerably once the expensive car supplement kicks in.
Scenario Three: Used EV Bought in 2027
You buy a three-year-old Nissan Leaf in April 2027. It was registered in March 2025, so it’s still VED-exempt. You pay nothing for VED for as long as you own it. This is why used EVs registered before April 2025 are likely to hold their value rather well.
If you buy a three-year-old Leaf that was registered in May 2025, you pay the standard rate: £190 per year. The expensive car supplement doesn’t apply to you (even if the car originally cost over £40,000) because it only runs for five years from the second time the vehicle was taxed, and the previous owner has already used up some of that period.
What About Salary Sacrifice and Company Cars?
Here’s where it gets interesting. If you get your EV through a salary sacrifice scheme, the VED is almost always included in your monthly package price. You won’t pay it directly. However, the leasing company pays it, and they factor that cost into your monthly deduction, so you’re paying it indirectly.
The same applies to company cars provided by your employer. The company pays the VED and may or may not pass that cost on to you, depending on your particular arrangement.
The crucial point: the 2% Benefit-in-Kind rate for EVs (rising to 3% in 2025/26, 4% in 2026/27, and 5% in 2027/28, based on current government policy) remains vastly lower than the BiK rate for petrol and diesel cars, which ranges from 20% to 37% depending on emissions. VED costs are a rounding error compared to the BiK saving. A 40% taxpayer driving a £50,000 EV company car pays about £1,000 per year in BiK tax in 2025/26. The same car in petrol, emitting 150g/km, would generate a BiK bill around £7,500 per year.
The Bottom Line in Real Money
If you’re buying an EV under £40,000 from April 2025, you’re adding roughly £150 to £200 per year to your running costs compared to the current exemption. Annoying, but not transformational.
If you’re buying over £40,000, budget for £600 per year (£50 per month) for the first five years of ownership, then £190 after. That’s real money, but you’re still paying considerably less VED than a petrol equivalent, and if it’s a company car, the BiK saving dwarfs the VED cost entirely.
The genuinely smart move right now? If you’re planning to buy new in the next few months and can find the right car in stock, registering before 1st April 2025 locks in zero VED for the lifetime of the vehicle. Even if you’re salary sacrificing, ask your provider if they have pre-registered stock. Some do, and the VED saving over ten years of ownership is somewhere between £1,900 and £6,000 depending on list price. Worth a phone call.