Your Guide To Electric Vehicle Road Tax - And How It's Changing
If you own an electric car, you’ll know that doing your bit for the planet and cruising past fuel stations knowing that you can recharge at home is just part of the appeal. There’s also been a financial reward for those that choose battery-powered motoring too; electric vehicles currently cost nothing to tax. This perk, however, is set to expire in the years to come.
Late last year, the UK Government announced that Vehicle Excise Duty (or road tax, as you may refer to it as) is set to change in 2025 for electric cars. Many owners of EVs have been alerted to the fact that their motoring costs are due to rise, and they naturally have some questions.
As a retailer of electric vehicles here at EMG, we are of course very curious about the change in road tax for electric vehicles. We’ve done our research on this one, so that, if you own an electric car or you’re planning to buy one, you know the score when it comes to paying road tax on an EV.
How does road tax work for electric cars right now?
As the current road tax system is set up to reward ownership of lower-emission vehicles, you’ll find that electric cars are currently exempt from paying car tax - their CO2 footprint is zero!
Whilst cars with traditional combustion engines pay tax that takes into consideration when they were registered as well as what their CO2 output is, tax for electric cars is £0 regardless.
Let us be clear that you do still need to tax your electric vehicle; there just isn’t a cost attached.
How is electric car road tax changing, and how much will you have to pay?
As we mentioned earlier, it hasn’t mattered so far when your electric vehicle was registered, but from 2025, this will change. Therefore, if your vehicle was registered prior to 1st April 2017, you’ll pay £20 from 2025. If your vehicle was registered after 1st April 2017, you’ll pay £165 per year. It looks like this will apply to Hybrid vehicles too.
In 2025, the cheaper first-year rate will apply. You will pay just £10 for the first year, and then £165 thereafter.
Heard of the ‘expensive car supplement’? This is where things could get expensive for anyone who buys an electric car in 2025, or in the years following.
At the moment, anyone who buys a car with a combustion engine that has a list price (including optional extras) of £40,000 needs to pay an additional £355 from the second year and for a period of five years in total. Currently, this does not apply to zero-emission vehicles, and this will continue to be the case until 2025. From there on in, this will change.
Keen to know how much this will set you back? We’ve done the maths. You’ll pay £520 VED per year during years 2-5 of ownership, which may come as a bit of a shock!
Why is electric car tax changing?
Electric cars account for an increasing percentage of vehicles on UK roads, and this won’t slow down as we approach the 2030 ban on the sale of new petrol and diesel cars. It is, therefore, a case of equalising all motorists’ tax contributions, and making the system fairer, according to the Chancellor.
The Government has insisted that despite changing the rules regarding EV road tax, it still encourages the sale of electric vehicles through cheaper first-year VED rates. They’ve also made it clear that the additional revenue will continue to be used to support the UK's EV infrastructure, including investment in public charging points.
Choose your next electric vehicle here in East Anglia
If you’re looking to maximise the tax savings on electric vehicles, the time to act is now! Thanks to our range of new and used vehicles from our manufacturer partners as well as used electric vehicles from other much-loved brands, finding the electric car for you couldn’t be easier. And we’re here for the guidance you need.