If you bought an electric car before April 2025, your first Vehicle Excise Duty bill is either already here or on its way. After years of exemption, EVs registered from 1 April 2025 onwards now pay road tax like any other vehicle, and for many drivers, the numbers have come as an unpleasant surprise.
Here’s what you’re actually paying, how it’s calculated, and whether EVs still make financial sense compared to petrol or diesel.
The Two Rates That Apply to EVs
Electric cars now follow the same VED structure as petrol and diesel vehicles registered after April 2017. That means two separate charges: a first-year rate based on CO2 emissions, and a standard annual rate from the second year onwards.
Because EVs produce zero tailpipe emissions, the first-year rate is £10. It’s a token amount, really, and you’ll have paid this when you bought the car if you purchased from April 2025 onwards.
From the second year, you’ll pay the standard rate, which is £195 per year at the time of writing. That’s about £16.25 per month, or roughly what you’d spend on two decent supermarket shops.
The Expensive Car Supplement: Where It Gets Painful
Here’s where many EV drivers are experiencing sticker shock. If your car had a list price over £40,000 when new, you’ll pay an additional £425 per year on top of the standard rate for five years, starting from the second time the vehicle is taxed.
That brings your total annual VED to £620, or about £51.67 per month, for years two through six of ownership. From year seven onwards, you drop back down to the standard £195 rate.
The £40,000 threshold catches a huge number of popular EVs. A base Tesla Model 3, Kia EV6, Hyundai Ioniq 5, Polestar 2, and most trims of the Volkswagen ID.4 all trigger this supplement. Even the MG4 in its higher specifications crosses the line.
Worked Example: Tesla Model 3
Let’s say you bought a Tesla Model 3 Long Range in May 2025 with a list price of £49,990. Here’s your six-year VED breakdown:
Year one (2025-2026): £10
Years two to six (2026-2031): £620 per year, total £3,100
Year seven onwards: £195 per year
Total VED for the first six years: £3,110, or about £518 per year on average.
How This Compares to Petrol and Diesel
A petrol equivalent, say a BMW 3 Series 320i with a list price over £40,000, would pay a first-year rate of £220 based on its CO2 emissions (around 140g/km), then the same £620 annual rate (standard £195 plus expensive car supplement £425) for years two through six.
Over six years, the petrol car would pay £3,320 in VED compared to the EV’s £3,110. The difference is £210, or about £35 per year. Not nothing, but hardly the decisive factor it once was when EVs paid zero.
The real savings remain in fuel costs. Charging at home on an overnight EV tariff like Octopus Intelligent Go (9p per kWh at the time of writing) costs roughly £4 to £5 per 100 miles. The equivalent petrol journey at current pump prices (around 135p per litre) and typical efficiency (45mpg) costs closer to £13 to £14 per 100 miles.
For a driver covering 10,000 miles annually, that’s a fuel saving of roughly £900 to £1,000 per year, which more than absorbs the VED cost.
How to Check What You’ll Pay
Your V5C logbook shows your vehicle’s CO2 emissions (which will be zero for a pure EV) and the list price when new. If you’re buying used and the V5C doesn’t show the original list price, you can check the DVLA vehicle enquiry service online using your registration number.
Alternatively, look up the original manufacturer’s price list from the year your car was first registered. The list price for VED purposes includes the base price plus any factory-fitted options and VAT, but not dealership-fitted accessories or the first registration fee.
Your VED renewal reminder (form V11 or V85/1 for direct debit) will show exactly what you owe and when it’s due. DVLA sends these out automatically, though increasingly they’re moving to email reminders if you’ve opted in.
Does Salary Sacrifice Still Work?
If you’re leasing through a salary sacrifice scheme, VED is typically included in your monthly payment, so you won’t see a separate bill. The provider pays it and factors the cost into your lease price.
Company car tax (Benefit in Kind) remains at 2% of the list price for pure EVs in the 2025-26 tax year, rising to 3% in 2026-27 and 4% in 2027-28. For a higher-rate taxpayer driving that £49,990 Tesla Model 3, that’s about £400 per year in BiK at current rates, still dramatically lower than the £2,800 or so you’d pay on an equivalent petrol BMW.
Even with VED now applying, salary sacrifice or company car EVs remain one of the most tax-efficient ways to drive in the UK.
One Thing to Remember
If your EV cost over £40,000 when new, budget for £620 per year in road tax for years two through six of ownership, or about £52 per month. After that, it drops to £195 annually. The saving versus petrol isn’t in VED anymore. It’s in the fuel costs, which remain substantially lower if you can charge at home overnight.