In a significant shift for electric vehicle (EV) owners in the UK, a new tax change is set to take effect in April 2025, with experts urging drivers to act now to avoid a £195 annual car tax. According to Manchester Evening News, this change will impact more than 1.4 million EVs on the road.
While the exemption from Vehicle Excise Duty (VED) has been a key financial incentive for many, this update will bring the same tax burden to EV owners as their petrol and diesel counterparts.
What’s Changing for EV Owners?
Currently, electric vehicles in the UK benefit from an exemption from Vehicle Excise Duty (VED). However, starting in April 2025, EV owners will be required to pay the same VED rates as petrol and diesel car drivers, which typically amounts to £195 annually.
As Jonathan Such, a motoring expert from First Response Finance, explains,
Until now, one of the biggest benefits of owning an electric vehicle has been the financial incentives, particularly VED exemption. However, from April 2025, EV drivers will be required to pay car tax just like petrol and diesel drivers, which is typically around £195 per year.
This change will affect all electric vehicles registered after April 2017.
For those who act before April, there is a way to extend this exemption for another year, potentially saving around £200. By renewing their car tax now, drivers can extend their exemption until March 2026.
As Such further states,
However, if you renew your vehicle tax before April 2025, you could extend your exemption for another year, meaning you won’t have to pay until March 2026.
This option is particularly important for those who were unaware of the upcoming change, as nearly half of UK drivers are not yet informed about it.
The Financial Implications of the Tax Change
The £195 charge might not seem substantial for some, but for many EV owners, it represents a sudden and unexpected increase in running costs. As Such points out,
While EVs offer long-term savings on fuel and maintenance, the high upfront cost remains a significant barrier. It’s also clear that charging infrastructure and concerns around battery life are still making some motorists hesitant about making the switch.
For many, the additional tax burden could cause financial stress.
This tax change also highlights broader challenges in the UK’s push toward greater electric vehicle adoption. Research suggests that a significant portion of the population, particularly older drivers, remains sceptical of EV ownership due to factors like high initial costs, concerns over battery life, and charging infrastructure.
According to the research, nearly 45% of Brits are unaware of the upcoming tax change. This means that more than 600,000 EV drivers could be caught off guard by the new VED rules.
What EV Drivers Need to Know
Experts stress that potential EV buyers must research all associated costs, including the new Car Tax implications, running costs, and available grants before making the switch. As Such advises,
For those considering an EV, it’s important to research all the financial aspects, including tax changes, running costs and available grants, before making a decision.
For many, the financial benefits of owning an EV could be overshadowed by unforeseen charges like the VED.
