Major VED Changes in 2025: Road Tax for EVs and More

From April 2025, electric vehicles (EVs) will no longer be exempt from road tax (VED), as confirmed by the Government. Any EVs registered from 1 April 2025 onwards will pay an initial tax of £10 in the first year, followed by an annual charge of £195 from the second year onwards.

Existing EV owners won’t escape the changes either. Vehicles registered between 1 April 2017 and 31 March 2025 will also be subject to the £195 annual charge from their next tax renewal after April 2025. Older electric cars, registered between March 2001 and March 2017, will fall into Band B, meaning their road tax will be set at £20 per year.

Additionally, the ‘Expensive Car Supplement’ (ECS) will now apply to electric cars costing over £40,000, removing their previous exemption. This adds an extra £355 per year for the first five years of ownership. With Auto Trader data showing that around two-thirds of new EVs exceed this price threshold, many buyers will be affected.

Hybrid vehicles will also see a sharp increase in road tax rates. Those emitting between 1-50g/km of CO2 will see their first-year tax jump from £10 to £110, while those in the 51-75g/km category will see an increase from £30 to £130. Cars emitting more than 75g/km will face even steeper rises. For example, vehicles producing 151-170g/km of CO2 will see their first-year tax double from £680 to £1,360. In fact, every band above 76g/km will see a significant increase.

The main driver behind these tax hikes is the Government’s declining revenue from fuel duty, as more drivers transition from petrol and diesel to electric vehicles. At present, the treasury takes 53p per litre of petrol or diesel sold, whereas the tax on domestic electricity is significantly lower.

Despite these changes, the Government insists that the adjustments are not intended to generate additional revenue. Chancellor of the Exchequer Rachel Reeves stated in October that increasing VED in line with the Retail Price Index for 2025-26 is aimed at maintaining tax receipts in real terms.