From April 2027, electric car owners will start paying Vehicle Excise Duty (VED, or road tax as most of us call it) for the first time. But the actual amount you’ll pay depends on when you bought your EV, how much it cost, and whether it’s your first year of ownership or a subsequent one.
Here’s what you’ll actually pay, and whether buying sooner rather than later will save you money.
The Basic Rate: £110 Per Year
If you own an EV registered from April 2025 onwards, you’ll pay £110 per year (about £9 per month) starting in April 2027. That’s the standard rate for zero-emission vehicles at the time of writing, though rates typically increase slightly each year in line with inflation.
EVs registered before April 2025 won’t pay anything. Ever. They’re permanently exempt under the old rules, which is why some buyers rushed to get their orders in before that deadline.
The Expensive Car Supplement: An Extra £425 Per Year
Here’s where it gets costly. If your EV had a list price over £40,000 when new, you’ll pay an additional £425 per year (about £35 per month) on top of the standard rate for five years, starting from the second time the vehicle is taxed.
That means years two through six of ownership will cost you £535 per year, or roughly £45 per month. After year six, you drop back down to the standard £110 per year.
The £40,000 threshold catches a lot of EVs. A base Tesla Model 3 Long Range is around £45,000. The Kia EV6 GT-Line is about £51,000. Even mid-spec family SUVs like the Hyundai Ioniq 5 Premium regularly sit above that line. Check the V5C logbook for the ‘list price’ figure, not what you actually paid. Discounts don’t reduce the list price for VED purposes.
First Year Rates: Currently Zero for EVs
For EVs registered from April 2025 onwards, the first year rate is currently £0. You then pay the standard rate (£110) from year two onwards, plus the expensive car supplement if applicable.
This means an EV costing £45,000 registered in May 2025 would pay nothing until its second birthday in May 2027, then £535 per year until May 2031, then £110 per year after that.
Three-Year Ownership Cost Comparison
Let’s compare two scenarios for someone buying a £45,000 EV today and keeping it for three years:
Scenario A: Bought before April 2025
Total VED paid over three years: £0
Scenario B: Bought after April 2025, owned from May 2025 to May 2028
Year one (May 2025 to May 2026): £0
Year two (May 2026 to May 2027): £0 (the new rates don’t start until April 2027)
Year three (May 2027 to May 2028): £535
Total VED paid over three years: £535
For a three-year ownership period starting now, you’d save £535 by buying before April 2025. But that ship has sailed.
Scenario C: Buying after April 2025, owned from June 2025 to June 2028
This is the situation most buyers face now. You’ll pay nothing for roughly your first two years, then £535 for year three. Still £535 total for a three-year ownership.
Scenario D: Buying a £38,000 EV (below the expensive car threshold)
Year one: £0
Year two: £0
Year three: £110
Total VED paid over three years: £110
Should You Wait or Buy Now?
From a pure VED perspective, there’s no financial advantage to waiting. The April 2025 exemption deadline has passed, so whether you buy in March 2025 or September 2025, you’ll start paying VED from April 2027 onwards.
However, if you’re considering a car that’s hovering around the £40,000 mark, it’s worth checking whether a slightly lower trim or a different model could keep you under that threshold. The difference between a £39,995 car and a £40,005 car is £2,125 in VED over five years (that’s £425 per year for five years).
Check Your Company Car Tax Position First
If you’re getting an EV through a salary sacrifice scheme or as a company car, VED changes matter less. Your employer typically pays the VED, and your benefit-in-kind tax (currently 2% of the list price for EVs in the 2024/25 tax year) remains the bigger financial consideration. That rate is scheduled to increase to 3% in 2027/28 and 4% in 2028/29, so if you’re comparing company car costs, factor in both changes.
Before making any decisions based on VED changes, run the numbers on your specific situation. The tax tail shouldn’t wag the car-buying dog, but £535 per year is roughly the cost of an Intelligent Octopus Flux tariff for someone driving 8,000 miles per year. It’s not nothing.