New Year, New EV vehicle?

Understanding the latest UK electric vehicle tax changes, what you need to know.

Electric vehicles have been hugely popular in the UK over the last few years, with drivers looking to cut emissions and running costs. But changes announced in the Autumn budget caused a fair bit of debate, and some confusion around what implications will be placed on EV drivers, so, we thought it was worth laying out the facts clearly.

1. EV’s are no longer fully exempt from road tax

For many years, pure electric vehicles have been exempt from paying road tax (VED). This scheme ended in April 2025, here’s the info:

• From 1 April 2025, most electric cars must now pay road tax, just like petrol and diesel cars.
• New EVs registered after April 2025, must now pay a £10 first-year VED, then £195 a year thereafter.
  EVs registered from April 2017-April 2025, will pay the standard £195 per year
• Older EVs (registered before April 2017) now move into the appropriate VED band and pay from around £20 a year, you can check out what you’ll be paying on the gov.uk website, by entering your registration number.
• Electric vans and other zero-emission commercial vehicles are now taxed at their standard rates too. 
  

2. Higher-value EV’s face extra charges

So, this is where it gets confusing, there is also something called the Expensive Car Supplement (ECS), and this banding is based on the manufacturer official price list:

• For EVs registered from April 2025, the threshold was updated to vehicle worth above £50,000. 
• The ECS payment kicks in after 12 months after the registration date, so years 2-6.
  The payment is currently £425 a year.  
• The ECS payment will also apply to second hand vehicles depending on when they were registered.
  

3. A new ‘Pay-Per-Mile’ tax is planned from 2028

This was the biggy, that created a lot of chatter in the automotive world and I’m guessing some households too:

• From April 2028, EVs will pay an additional per-mile tax, which will be referred to as the Electric Vehicle Excise Duty (eVED).
• The initial published rate is about 3p per mile for battery electric vehicles and 1.5p per mile for plug-in hybrids, so if you do high mileage, you need to take this into account. 
• Note that this payment is in addition to the standard road tax. So, someone driving 10,000 miles a year might pay about £300 extra just in mileage charges. 
• The government have said they won’t introduce tracking devices to manage this, but in the first 3 years they will need to estimate their mileage and if at the end of the year you have done less or more, you will either receive a refund or credit or be required to make a top up payment. There is also talk of mileage checks being done at accredited centres. However, once your vehicle is old enough for an MOT the mileage will be logged at this point.
  

4. The Electric Car Grant is still available

The Government extended the Electric Car Grant scheme which will run until 31 March 2030. However, this is only useful if you are buying the vehicle outright, or via PCP directly from the dealer.

• Only applies to EVs that qualify, so a list price of £37,000 or less, have a range of 100 miles on the WLTP test and be listed on the official government list that dealers use. 
• The Electric Car Grant offers up to £3,750 off the purchase price of eligible new electric cars. 

So, what does it all means for you? When debating whether it’s still worth owning an EV, here are the key points to weigh up:

Running Costs: EVs generally cost less to run than petrol/diesel cars thanks to cheaper electricity versus the ever-spiralling petrol and diesel costs at the pump.

Tax costs are rising: You will now pay road tax, and higher-priced models will face the ECS charge. And in 2 years (2028) the per-mile charge will be introduced.

Grants: As shown, this only applies to a pre-defined list of vehicles and will only support buyers.

Long-Term Trends: Since the announcement in the Autumn budget, EV sales have remained strong in the UK, and many drivers still switch for environmental benefits and lower day-to-day costs.  

Bottom line, yes, electric vehicles in the UK are no longer tax-free, and, new tax charges make owning one more like a petrol or diesel car from a road tax perspective. Even with the introduction of the pay per-mile charges in 2028, EV’s can still make financial sense for many drivers. If you decide to buy an EV, it’s worth calculating your expected annual mileage and road tax costs before you buy, and keeping an eye on how the road tax rules develop before the 2028 pay per mile tax comes in.