From April 2025, the days of free road tax for electric cars came to an end. After years of £0 Vehicle Excise Duty (VED) as an incentive to switch to zero-emission vehicles, HMRC brought EVs into the standard VED system. For some owners - particularly those with premium EVs - the bill is surprisingly significant. Here is everything you need to know about VED for electric cars in 2026.
What Changed in April 2025?
Prior to April 2025, battery electric vehicles (BEVs) registered after April 2017 paid £0 per year in VED. This exemption was a deliberate government incentive to accelerate EV adoption. From April 2025, that exemption ended. EVs are now subject to:
- Standard rate: £190/year - applies from the second year of registration onwards (same as most petrol and diesel cars).
- First year rate: £10 - a reduced first-year rate applies specifically to zero-emission vehicles (petrol and diesel cars paying significantly more in their first year based on CO2 emissions).
- Expensive Car Supplement: £425/year - applies to any car with an original list price exceeding £40,000 (including options), payable for years 2 through 6 (five payments in total).
The Expensive Car Supplement: Who Is Affected?
The Expensive Car Supplement (ECS) is the most impactful change for EV owners. Because the majority of popular electric cars carry list prices above £40,000, a large proportion of new EV buyers face this additional charge. In practice, this means:
| EV Model | List Price (approx.) | Annual VED (yrs 2–6) | 5-year VED total |
|---|---|---|---|
| Tesla Model 3 Long Range | £42,990 | £615/yr | £2,470 |
| Tesla Model Y Long Range | £44,990 | £615/yr | £2,470 |
| BMW iX3 | £59,905 | £615/yr | £2,470 |
| Hyundai Ioniq 5 Standard Range | £38,450 | £190/yr | £760 |
| MG4 Standard Range | £26,995 | £190/yr | £760 |
| Dacia Spring Electric | £14,995 | £190/yr | £760 |
VED rates from April 2025 (DVLA). Standard rate £190/yr; Expensive Car Supplement £425/yr for list prices over £40,000 for years 2–6. First-year rate £10 for zero-emission vehicles. List prices approximate, excluding options.
EVs vs Petrol: VED by CO2 Band
Despite the new charges, EVs still compare favourably to high-emission petrol and diesel cars, especially in the first year. The table below shows the first-year VED rate for petrol cars by CO2 band (April 2025 rates), alongside the EV rate:
| CO2 Emissions | First Year VED | Subsequent Years |
|---|---|---|
| 0g/km (BEV) | £10 | £190 (+ £425 ECS if >£40k) |
| 1–50g/km (PHEV) | £10 | £190 |
| 51–75g/km | £30 | £190 |
| 76–90g/km | £135 | £190 |
| 91–100g/km | £175 | £190 |
| 101–110g/km | £195 | £190 |
| 111–130g/km | £220 | £190 |
| 131–150g/km | £270 | £190 |
| 151–170g/km | £680 | £190 |
| 171–190g/km | £1,095 | £190 |
| Over 255g/km | £2,745 | £190 |
Source: DVLA VED rates April 2025. Standard rate is the same (£190) for all cars from year 2 onwards. The key differentiator from year 2 is the Expensive Car Supplement (£425 extra) for list prices over £40,000.
Impact on Total Cost of Ownership
For a Tesla Model Y owner over five years, the VED change means an additional cost of approximately £2,460 compared to the previous zero-rate. Spread over five years, that's £41 extra per month - significant but not transformative within the full TCO picture, where depreciation still dominates.
For budget EVs priced below £40,000 (MG4, Dacia Spring, Nissan Leaf), the impact is smaller: £190/year in years 2–5, totalling £760 over five years. This is still less than many petrol cars with higher emissions pay in first-year VED alone.
Business Owners: First Year Allowance (FYA)
For businesses, electric cars purchased outright attract 100% First Year Allowance (FYA) on corporation tax. This means the full purchase price can be deducted from taxable profits in the year of purchase. A company buying a £44,990 Tesla Model Y receives an immediate tax deduction of £44,990 - worth £8,998 in saved corporation tax at the 20% rate, or up to £11,248 at 25%.
Petrol and diesel cars do not qualify for FYA and must be depreciated using capital allowances over many years. This makes electric vehicles considerably more attractive from a business tax perspective, even with the new VED charges.
Practical Tips for EV Buyers
- Check the list price carefully - if you're considering an EV with a list price just above £40,000, adding options may trigger the Expensive Car Supplement. Sometimes a lower specification saves you £2,125 over five years.
- Factor VED into your TCO calculation - it's easy to forget, but for a premium EV it now represents a meaningful cost.
- Used EV buyers: check the registration date - cars registered before April 2025 may still have some VED-free years remaining (if within their original VED-free period under older rules).
- Business buyers: claim FYA - the 100% First Year Allowance for zero-emission cars makes EV ownership particularly tax-efficient for limited companies.
Want to see the full VED impact within your 5-year ownership costs? Our TCO calculator includes accurate UK VED calculations for every car type, including the Expensive Car Supplement - so you see the complete picture before you buy.
Sources: DVLA Vehicle Excise Duty rates April 2025, HMRC Capital Allowances guidance (First Year Allowance for zero-emission cars), HMRC BiK tables 2026/27, HM Treasury Autumn Statement 2023 (VED for EVs announcement). VED rates correct as at April 2025. Always verify current rates at gov.uk/vehicle-tax-rate-tables.