EV Owners Unaware of Upcoming £195 Road Tax Increase
EV owners need to re-tax their vehicles before April to save nearly £200 over the next year, especially as vehicles over £40,000 face a £600 annual road tax charge.
A survey of 2,000 UK car owners conducted by used car retailer Motorpoint revealed that 83% of EV owners were unaware of the impending increase in vehicle excise duty (VED) tax from April 2025.
Currently, EVs enjoy a road tax exemption, meaning no charge for taxing electric vehicles. However, starting in April 2025, EV owners will face charges up to £620 in road tax, a measure announced in the 2022 Budget by then Conservative Chancellor Jeremy Hunt.
New electric cars will incur a £10 tax for the first year, up from £0, while those priced under £40,000 will be charged £190 per year from the second year onwards.
The most expensive EVs, costing over £40,000, will be charged £600 per year from the second year, including the £410 'expensive car supplement'. The high average price of EVs means that tens of thousands of drivers will be subject to the top rate. As of now, EVs account for around 20% of all cars on the road.
With the changes taking effect on 1 April, Mike Vousden, Motorpoint’s resident EV expert, stated: ‘As more car owners switch to electric, the current exemption means fewer motorists are paying vehicle excise duty (also known as road tax). Consequently, less tax is being collected from motorists. The government is also losing out on fuel duty as EVs don’t require petrol or diesel, which has tax included in the pump price. The government predicts that the loss of these two major sources of motor taxation could create a £35bn shortfall, making the current system unsustainable.’
How much road tax will EV owners pay?
‘Understanding the taxation policy for electric vehicles can be quite complicated, but if an EV was first registered before 31 March 2017, motorists will be expected to pay £20 per year,’ explained Vousden.
‘If it was registered between 1 April 2017 and 31 March 2025, it will be £195 per year from the start of this April. Anyone planning to buy a new EV after 1 April 2025 will pay £10 in the first year and then £195 – or more – in every subsequent year.’
How can EV owners save £195 over the next 12 months?
Vousden offers valuable advice for EV drivers who need to renew their road tax in the next six weeks.
‘Motorists might not realize that they can re-tax their car at any time, meaning an EV owner could effectively extend their road tax exemption by 11 months if they were to re-tax in March 2025 – ahead of the rules changing,’ said Vousden.
‘This means that you’ll be delaying your payment until March 2026 when it will need renewing again – saving yourself £195. It’s undoubtedly a quirk in the system but something for EV owners to consider. Keep in mind that when you re-tax your car, you’ll be charged from the start of the month, so there’s no benefit to waiting until the end of March to renew. In fact, I’d suggest setting a reminder and doing it on 1 March.’
The government aims to halt the sale of new combustion engine cars by 2030, with a target of 2035 for the transition to zero-emission vehicles. Industry experts and the car industry believe this goal is unachievable, with an overwhelming majority (80%) of respondents to the Motorpoint survey stating that the government should do more to encourage EV adoption.
Feedback from a recent consultation on phasing out sales of new petrol and diesel cars, along with ‘demand measures to support the uptake of zero-emission vehicles,’ is being considered by the Department for Transport.
The Motorpoint survey of 2,000 UK car owners was conducted by The Leadership Factor in January 2025.