Navigating New EV Taxes: Keeping Electric Driving Smart and Affordable .
Author: Christie Parr
As someone who’s been keenly following the adoption of the EV in the UK, I’ve watched the EV infrastructure being built, and with the new tax laws coming in it appears we are moving into the next phase of the project.
The zero-rated Vehicle Excise Duty (VED) has been a significant factor in this transformation. While we’re still on the journey towards our 2050 net-zero goals, this policy has given us some meaningful momentum.
Now, it seems we’re turning a new page. From April 2025, EVs will be joining the VED club alongside petrol and diesel vehicles, meaning owners will pay tax. The news initially raised my eyebrows, but upon closer inspection it isn’t all doom and gloom as some would like to make out. It marks a significant step in our step towards net-zero. We’re moving from being the newcomers to EV’s becoming an integral part of the UK’s transport mix.
But exactly what does all of this mean for current owners, potential buyers, and the future of sustainable transport? Let’s fuel up on the facts.
Understanding the new tax landscape
From April 2025, electric vehicles will join the VED (Vehicle Excise Duty) club. This means EV owners will start contributing to road maintenance just like other drivers. While this represents a change, it’s important to view this in context.
Here’s how the costs will work according to the Government website [4]:
How the EV tax changes will affect your vehicle
Electric and low emission cars registered on or after 1 April 2025
You will need to pay the lowest first year rate of vehicle tax (which applies to vehicles with CO2 emissions 1 to 50g/km). From the second tax payment onwards, these vehicles will pay the standard rate. This is £190 for 2024 but is subject to change for 2025.
Electric and low emission cars registered between 1 April 2017 and 31 March 2025
You will pay the standard rate. This is £190 for 2024 but is subject to change for 2025.
Electric and low emission cars registered between 1 March 2001 and 31 March 2017
These vehicles will move to the first band that has a VED value. This is £20 for 2024 but is subject to change for 2025.
Hybrid and alternatively fuelled vehicles (AFVs)
The £10 annual discount for hybrid and AFVs will be removed, and the rate you will pay will depend on when the vehicle was first registered. If the vehicle was:
- Registered before 1 April 2017 – this rate will depend on the vehicle’s CO2 emissions (check the current rates for this vehicle)
- Registered on or after 1 April 2017 – you will pay the standard rate (this is £190 for 2024 but is subject to change for 2025)
Electric vans
Most electric vans will move to the standard annual rate for light goods vehicles. Check the current rates for this vehicle.
Electric motorcycles
Electric motorcycles and tricycles will move to the annual rate for the smallest engine size. Check the current rates for this vehicle.
Additional rate (expensive car supplement)
For new electric vehicles with a list price exceeding £40,000, you will now need to pay the expensive car supplement from the second tax payment onwards. This applies to all vehicles registered on or after 1 April 2025 and could bring the annual tax rate to £600 [1].
The benefits of electric vehicles
The potential cost savings are definitely appealing. Even with the upcoming tax changes, it seems EVs could still potentially be easier on the wallet when it comes to running costs. The idea of “refueling” at home and dodging those ever-rising petrol prices is pretty tempting.
I’m also a bit of a tech enthusiast, so the advanced features in EVs have me curious. The thought of driving a car that gets regular software updates, almost like a smartphone on wheels, is exciting. It feels like a glimpse into the future of driving.
The environmental aspect is a big draw too. I like the idea of reducing my carbon footprint without giving up the convenience of personal transport. It feels like a practical way to contribute to a cleaner environment.
While the tax situation is evolving, I’ve noticed there are still some government incentives floating around for EV adoption.
Here are some of the government incentives for EV owners
The EV chargepoint grant
The EV Chargepoint Grant offers up to 75% off the cost of installing a smart charging point at home, with a maximum of £350[2][3]. This grant is available to renters, flat owners, and landlords with private off-street parking [2].
The EV infrastructure grant
For businesses and residential car park owners, the EV Infrastructure Grant provides up to £30,000 or 75% off the cost of installing multiple charge point sockets [3]. The Workplace Charging Scheme offers similar benefits for businesses, covering up to 75% of installation costs, capped at £350 per socket [3]
Funding in Scotland for EV chargepoint installation
In Scotland, residents can access up to £400 in funding for EV chargepoint installation through a grant managed by Energy Saving Trust. Additionally, EV owners currently enjoy road tax savings, with a 0% rate until 2025 [3].
As the government continues to support the transition to electric vehicles, these incentives provide significant financial benefits for both individual EV owners and businesses looking to embrace greener transportation options.
Some motorists have been slow to adapt to EV’s due to myths circulating in the UK. Myths such as there aren’t enough charging points, or EV batteries don’t have enough range. We have separated the fact from the fiction and debunked popular myths.
How I think EV owners can get some peace of mind
Working in the extended warranty industry, I’ve seen first-hand how EVs are gradually becoming a reality, especially as they gradually become more affordable. While they offer exciting technology and potential savings, they also come with unique risks. That’s where extended warranties shine.
As there are more used EV’s on the market, extended EV warranties are an excellent way to protect your investment, also offering:
- Peace of mind: Protect against unexpected EV repair costs
- Many extended warranties now offer EV-specific protection, including components like drive batteries and the auxiliary battery
Even with changing tax structures, the core benefits of EVs remain strong – and a good warranty helps preserve those advantages. Covering essential components from complex electronics to the crucial drive battery, warranties can help protect owners from expensive repair bills (subject to specific plan terms and conditions).
Are you ready for the future? Protect yourself from expensive EV repairs, including the drive battery (subject to T&Cs) and get motoring peace of mind. Explore our range of EV warranties and buy your warranty online today.