TL;DR
Electric cars now pay Vehicle Excise Duty under rules that took effect on 1 April 2025. New EVs pay a £10 first-year rate then £180 standard rate. Cars with a list price over £40,000 also pay the expensive car supplement.
Electric cars now pay Vehicle Excise Duty under rules that took effect on 1 April 2025, ending the previous exemption. New EVs pay a first-year rate of £10 and the standard annual rate of £180 thereafter. Cars with a list price over £40,000 also pay the expensive car supplement, currently £410 a year, for five years after first registration.
How VED applies to EVs now
Under the new rules, electric cars are treated the same as petrol and diesel cars for VED purposes from April 2025. The first-year rate is £10 in the lowest band, and the standard rate of £180 applies from the second year onwards.
Cars registered between 1 April 2017 and 31 March 2025 also pay the standard £180 rate from April 2025. EVs registered before April 2017 pay £20 a year under the older car system.
The expensive car supplement
Cars with a list price over £40,000 pay an expensive car supplement of £410 a year on top of the standard rate. The supplement applies from the second year of registration for five years.
Total VED on a £40,000-plus EV is £590 a year from the second year onwards, falling back to £180 from year seven. The list price figure is the manufacturer's recommended retail price including options.
Why the rules changed
The exemption for electric cars was designed to encourage EV adoption when uptake was low. As the proportion of EVs on UK roads has risen, the Treasury extended VED to maintain the road tax revenue base.
The first-year rate of £10 remains lower than the rate for high-emission petrol or diesel cars, which can run into thousands. The differential supports continued EV adoption while ending the full exemption.
How to pay
VED is paid through gov.uk or at a Post Office. Drivers receive a reminder several weeks before the renewal date. Direct Debit options include monthly, six-monthly and annual payments.
Cars sold without a current VED disc no longer apply. The reminder system now relies on the DVLA database, so drivers should ensure their address is up to date through gov.uk.
How the change affects company car drivers
Company car drivers pay benefit in kind tax on EVs, which remains at a lower rate than for petrol or diesel cars. The 2026-27 benefit in kind rate for fully electric cars is 3 per cent of the list price.
The benefit in kind rate is set to rise by 1 percentage point each year from 2025-26 onwards, reaching 7 per cent in 2029-30. The full schedule is in the HMRC company car tax guidance on gov.uk.
Key facts
- EVs first-year VED rate is £10.
- Standard annual rate is £180 from year two.
- Expensive car supplement £410 for cars over £40,000.
- EV company car benefit in kind 3 per cent for 2026-27.
- Reminder by DVLA database, no paper disc.
FAQ
Do electric cars pay road tax now?
Yes, since 1 April 2025. New EVs pay a £10 first-year rate and the £180 standard rate from year two. The previous full exemption has ended.
What is the expensive car supplement?
An additional £410 a year for cars with a list price over £40,000, applied for five years starting from the second year of registration. The total VED is £590 a year for those years.
How do I pay my VED?
Online through gov.uk or at a Post Office. DVLA sends a reminder several weeks before renewal. Direct Debit options include monthly, six-monthly and annual.
Does the change affect company car drivers?
Company car drivers pay benefit in kind tax. The 2026-27 EV rate is 3 per cent of the list price, rising by 1 percentage point a year to 7 per cent in 2029-30.
