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Update on road tax arrangements for EVs

The Government announced yesterday that road tax (vehicle excise duty) exemptions for electric, hybrid and alternative fuel cars and the Band A rate for older petrol and diesel cars will come to an end in 2025.  This means that most cars that currently qualify for free road tax will have to start paying from April 2025, including electric cars.  Our view is that this was inevitable and recognises that electric cars are the transport of choice for most households going forwards.

In terms of timing and actual costs, there will be no road tax to pay until 1 April 2025.  It will then apply as follows:

  • New EVs registered from April 2025 will pay the lowest first year rate of road tax (currently £10/year) and from year two will move to the standard rate (currently £165/year).
  • EVs registered between 1 April 2017 and 31 March 2025 will pay the standard rate (currently £165/year) from April 2025.
  • EVs registered before 31 March 2017 will pay the Band B rate from April 2025 (currently £20/year).

Electric cars will still be cheaper to run than petrol/diesel cars costing half the price to fuel when relying on the fast charging network or charging from home (even with current energy price rises) plus lower servicing and maintenance costs.

The other big change for EVs is that they will be subject to the Expensive Car Supplement from April 2025 (also known as luxury car tax).  This means that new cars registered after 1 April 2025 with a list price that exceeds £40k will pay a supplement (currently £355/year) during the first five years of registration in addition to their road tax.  Another great reason to buy pre-owned!