What Is Vehicle Excise Duty on EVs From 2025 Onwards?

Electric cars became liable for Vehicle Excise Duty (VED) for the first time on 1 April 2025, ending a 24-year exemption that began in 2001. The rates depend on when the car was registered and how much it cost when new. Most electric cars now pay £200 per year in standard VED. Cars with a list price above £50,000 pay an additional £440 per year through the Expensive Car Supplement, giving a combined annual bill of £640.

What are the confirmed VED rates for electric cars?

EV registration date	2025/26 rate	2026/27 rate
Before 1 March 2001	£0	£0
1 March 2001 to 30 March 2017	£20	£20
1 April 2017 to 31 March 2025	£195	£200
On or after 1 April 2025	£10 (year 1), then £195	£10 (year 1), then £200
List price over £50,000 (from year 2)	£195 + £390 = £585	£200 + £440 = £640

Note: The standard rate and expensive car supplement are both uprated annually by inflation. The figures above are confirmed by GOV.UK for their respective years.

Why did the exemption end?

The Office for Budget Responsibility projected a growing shortfall in VED and fuel duty receipts as EV adoption accelerated. The Treasury announced the change in the Autumn 2022 Budget, citing the need for all road users to contribute to road maintenance costs. With zero-emission vehicles representing approximately one in five new car registrations by the time the change came into effect, the revenue gap had become material.

The three-year notice period was designed to prevent market disruption. In practice, the announcement did not significantly dampen EV sales growth through 2023 or 2024.

What is the Expensive Car Supplement and how does it apply to EVs?

The Expensive Car Supplement (sometimes called the luxury car tax or first-year rate supplement) is a five-year surcharge applied to cars with a list price above a specified threshold when new. For 2026/27, the supplement is £440 per year, added on top of the standard £200 rate for years two through six from first registration.

Critically, the threshold differs for electric and petrol/diesel cars:

Car type	Expensive Car Supplement threshold (2026/27)
Petrol / diesel / hybrid	£40,000
Fully zero-emission (EV)	£50,000

The £50,000 threshold for EVs was introduced in November 2025 and applies retrospectively to all EVs registered on or after 1 April 2025. A buyer who purchased a £45,000 EV in summer 2025 — when the threshold was still £40,000 — no longer pays the supplement from April 2026. This was a specific policy measure to ensure the supplement did not disproportionately affect mid-range electric cars that sit above the petrol threshold but below what many would consider truly premium.

Which EVs are affected by the Expensive Car Supplement?

The £50,000 list price threshold rules out most mainstream EVs. Most family hatches, crossovers and entry-level saloons come in under the threshold. The supplement typically applies to:

• Tesla Model S (from ~£80,000)
• Tesla Model X (from ~£95,000)
• BMW i5 (from ~£60,000)
• BMW iX (from ~£75,000)
• Mercedes EQS (from ~£95,000)
• Porsche Taycan (from ~£82,000)
• Audi e-tron GT (from ~£90,000)

Models that sit comfortably below the threshold and avoid the supplement include:

• Renault R5 (from ~£23,000)
• MG4 (from ~£27,000)
• Volkswagen ID.3 (from ~£35,000)
• Hyundai Ioniq 6 (from ~£42,000, most trims)
• Kia EV6 (from ~£42,000, most trims)
• Tesla Model 3 (from ~£42,000, standard range)

Some models straddle the threshold: higher-spec trims of the Tesla Model Y, BMW i4, and Audi Q4 e-tron can exceed £50,000 depending on options. It is the OTR list price including factory options, not the transaction price, that determines liability.

How is VED renewed for an electric car?

The process is identical to any other vehicle: online at GOV.UK, at a Post Office, or by phone. You need a valid V5C logbook, valid insurance, and a valid MOT where applicable. EVs require an MOT from year four of registration, the same as petrol cars. There is no longer any automatic free renewal for zero-emission vehicles.

What about company car drivers?

Company cars are taxed through the Benefit-in-Kind (BIK) system rather than personal VED. The employer handles VED registration and payment for company vehicles. EV drivers benefit significantly from low BIK rates — 4% in 2026/27 versus 25 to 37% for petrol equivalents — which is a far larger financial advantage than the former VED exemption.

What is eVED and when does it arrive?

At the 2025 Budget, the government announced Electric Vehicle Excise Duty (eVED) — a pay-per-mile charge to sit alongside standard VED from April 2028. The proposed rate is 3p per mile for fully electric cars and 1.5p per mile for plug-in hybrid electric vehicles (PHEVs).

For a driver covering 10,000 miles per year, eVED would add £300 to the annual motoring bill. For a 15,000-mile driver, it would add £450. The full implementation detail — including how mileage is verified and how it interacts with VED — has not yet been legislated in final form.

The House of Commons Library confirmed in its eVED research briefing that the charge is intended to partially replace fuel duty receipts that will decline as petrol and diesel sales fall toward the 2035 new-car ban date.

Will VED rates for EVs increase further?

Standard VED rates are uprated by inflation each April in line with RPI. This applies to EVs and petrol cars equally. No specific additional rate increases for zero-emission vehicles beyond the eVED proposal have been announced. The £200 standard rate for 2026/27 is the confirmed figure; 2027/28 rates will be set at a future Budget.

Summary

Tax	2025/26	2026/27	From April 2028
Standard VED (EV, year 1 from April 2025)	£10	£10	TBC
Standard VED (EV, subsequent years)	£195	£200	£200 + eVED
Expensive Car Supplement (over £50,000 EV)	£390 (£40k threshold in 2025/26 for EVs)	£440	TBC
eVED	—	—	~3p/mile

For the full picture of EV running costs beyond road tax, visit the EV running costs and tax hub, or see which models offer the lowest overall cost of ownership on our cheapest electric cars to run page.