From April 2026, electric cars will start paying Vehicle Excise Duty (VED, or road tax) for the first time. If you own an EV or you’re thinking about buying one, you’ve probably wondered whether this changes the maths on resale values. The short answer: yes, but not in the way most people assume.
What’s Actually Changing
\p>Currently, battery electric vehicles pay nothing in VED. From 1 April 2026, new EVs will pay £10 in their first year, then the standard rate (currently £190 per year) from year two onwards. EVs with a list price over £40,000 will also pay the expensive car supplement of £410 per year for five years, just like petrol and diesel cars do now.
Crucially, this applies to all EVs registered before April 2026 as well. Your 2023 Kia EV6 or 2025 Tesla Model Y won’t be grandfathered in. Everyone pays from 2026 onwards, regardless of when you bought.
The Depreciation Question
You might expect this to hammer residual values. After all, a three-year-old EV that was previously tax-exempt will suddenly cost its next owner £190 a year to tax, or about £16 per month. For an expensive car supplement vehicle, that’s £600 per year (roughly £50 per month) for years four through eight of its life.
But here’s the thing: the used car market has already known about this since autumn 2022, when the policy was first confirmed. I spoke to several dealers who specialise in used EVs, and they’re not seeing panic. One dealer in Surrey told me that buyers are asking about VED, but it’s not killing deals. The reason? Context.
A buyer looking at a used Tesla Model Y Long Range (list price around £55,000 when new) is already budgeting for insurance, servicing, and charging costs. Adding £600 per year in VED works out to about £50 per month. That’s less than most people’s home broadband bill, and substantially less than the £150 to £200 per month in fuel they’d spend on an equivalent petrol SUV.
What Dealers Are Actually Seeing
I asked three used EV specialists whether they’d adjusted their pricing models ahead of the VED change. Two said they’d made marginal adjustments, in the region of £300 to £500 on higher-value cars. One said they hadn’t changed anything at all, because depreciation on EVs is still being driven by other factors: namely, how fast new EV prices are falling and whether the manufacturer has recently launched an updated model.
The dealer consensus seems to be that VED is part of the total cost picture, but it’s not the decisive factor. What matters more is whether a three-year-old EV feels like good value compared to a brand new one with better range, faster charging, and a fresh warranty.
Should You Buy Before or After April 2026?
If you’re asking whether to rush out and buy an EV now to somehow lock in tax-free motoring forever, the answer is no. You won’t avoid the charge. Every EV on the road pays from April 2026 onwards.
The more interesting question is whether used EVs will get cheaper in early 2026 as sellers try to offload them before the tax kicks in. Possibly, but if you’re a buyer, you won’t be dodging the VED bill either, so any price drop would just be sellers misjudging the market.
If you’re selling before April 2026, you might find buyers trying to negotiate on the basis that your car is “about to start costing £190 a year.” Your counter-argument is simple: so is every other used EV on the market, and yours is still cheaper to run than any petrol equivalent.
The Expensive Car Supplement Problem
The £40,000 threshold is where this gets more awkward. At the time of writing, that threshold hasn’t been adjusted for inflation since 2017, which means cars that felt reasonably priced when new (a Kia EV6 GT-Line, a Polestar 2 Long Range, most Tesla Model Ys) will attract an extra £410 per year for five years starting from their second birthday.
For a car entering year four in April 2026, that’s £600 per year in total VED for two years, then £190 per year after that. Over a typical seven-year ownership period from new, that’s £3,010 in VED compared to £0 under the old rules. Spread across those seven years, it’s about £36 per month.
Is that enough to shift residual values meaningfully? On a car worth £25,000 at three years old, probably not. On a car worth £15,000 at five years old, maybe slightly. But again, context matters: if you’re buying that five-year-old EV, you’re probably comparing it to a five-year-old diesel that costs £190 per year to tax anyway, plus substantially more to fuel.
The Real Takeaway
VED changes the total cost of EV ownership, but it doesn’t destroy the economic case. If £190 per year, or about £16 per month, makes or breaks your budget, you probably need to be looking at cheaper cars generally, not avoiding EVs specifically.
For buyers, the smart play is the same as it’s always been: focus on the total monthly cost including depreciation, charging, insurance, and now VED. For sellers, don’t expect buyers to pay a premium for your pre-2026 car. They know it’s paying tax from April 2026 regardless. The market has already priced this in, and the sky hasn’t fallen.
If you’re buying used and want to minimise VED exposure, look for cars with a list price under £40,000 when new. A Hyundai Kona Electric or MG4 will cost you £190 per year to tax from 2026 onwards. A Mercedes EQA or Polestar 2? That’ll be £600 per year for several years, then £190. Worth knowing before you buy.