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EV Road Tax Changes
06 Feb 2025
Currently all-electric vehicles and some hybrids come with the benefit of not paying any road tax, this scheme was to encourage road users to adopt a zero emissions greener lifestyle.
Until now, 100% battery electric cars and some hybrids have been treated to free road tax – officially known as Vehicle Excise Duty – to help lower costs and encourage adoption. However, at the end of 2022, as part of the Government's autumn statement, it was announced that electric car owners will be required to pay road tax from 2025.
What does this mean for EV users?
At the end of last year it was announced how much EV users will be required to pay. From 1 April 2025, any EVs registered on or after 1st April 2025 will pay a first-year rate of £10 and then the standard annual rate of £195 from the second year onwards.
If your EV is registered between 1st April 2017 and 3rd March 2025, you’ll pay the standard £195 rate from your next tax renewal after April 2025.
If your EV is older and was registered between March 2001 and March 2017, you’ll move into Band B meaning you’ll pay £20 a year.
However if you purchase an electric vehicle with a list price of £40,000 or more you will qualify to pay a premium level of car tax.
Will this affect Benefit In Kind (BIK) Tax?
Benefit In Kind (BIK) is a tax for employees who gain benefits or perks on top of their monthly wage. If you are offered a company car which involves private usage, you will need to pay a BIK contribution, or company car tax. BIK is currently at just 2% for all zero-emissions until 2025 and is also set to rise. But there is good news, if you currently have an electric vehicle on order, BIK will rise by a maximum of just 1% between 2025 and 2028. So the huge savings in monthly tax for EVs are still present and with this incentive there has never been a better time to take the electrifying steps to reducing your carbon footprint.
Environmental Incentives to go all-electric
1. Efficiency
EVs are considered to be more efficient and use less energy to undertake the same tasks as cars using fossil fuels. When it’s time to ‘refuel’, battery power requires you to simply plug and go at your nearest charging point.
2. Zero Pollution
Did you know that in 2022 20% of all global greenhouse gas emissions came from transportation in the UK? When you drive a fossil fueled vehicle, harmful emissions are released into the atmosphere. A combination of both carbon dioxide and greenhouse gases, which come from your exhaust, are responsible for climate change and have a lasting, damaging effect on the environment. Although electric cars require electricity in order to power them, their carbon output is significantly lower than those using petrol or diesel. Preventing air pollution will make a huge difference in protecting our planet and our own health.
3. Positively Peaceful
Have you ever driven an all-electric vehicle? Your first time will always have you questioning, is the engine on, if I press the accelerator will I even move? Not only do they reduce air pollution, but they also reduce the noise pollution! The kids can sleep peacefully in the back of the car and you can take a moment to enjoy the scenery as you glide smoothly across the roads.
How does this affect Hybrid users?
Any cars producing between 1-50g/km of CO2 emissions will see an increase in VED from £10 to £110 a year. For cars producing 51-75g/km, VED increases from £30 to £130.
If you think it’s your time to switch to a more sustainable lifestyle, check out our all-electric and hybrid models available. Have a question? Our sales teams are on hand to help, contact us.
