Electric and Low Emission Vehicle Tax Has Changed - What UK Drivers Need to Know Now

Electric and Low Emission Vehicle Tax Has Changed - What UK Drivers Need to Know Now

The UK has officially entered a new era for electric and low emission cars. For years, EV owners enjoyed the sweet deal of zero road tax, lower running costs, and exemption from congestion zones. But from April 2025, that’s all changed. The government has gone with a major shift in Vehicle Excise Duty (VED), and if you drive - or plan to buy - an electric or hybrid car, these updates will affect you directly. Let’s break down what’s changed, what stays the same, and how this impacts both used car buyers and electric vehicle owners across the UK.

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Why the Government is Changing EV Tax Rules

For over a decade, electric and ultra-low emission vehicles were exempt from road tax to encourage greener motoring. That worked - electric vehicle ownership exploded in the UK, with more than one million EVs on the road by early 2025.

But with the rise in EV popularity, the government’s tax revenue from traditional petrol and diesel vehicles has taken a hit. The new changes aim to “level the playing field” and ensure all drivers contribute fairly to road funding, regardless of fuel type.

This is also part of a wider strategy to modernise the Vehicle Excise Duty system and prepare for the 2035 petrol and diesel ban, when most new cars sold in the UK will be electric.


What’s Changed for Electric and Low Emission Vehicles?

The new Vehicle Excise Duty (VED) changes came into effect from 1 April 2025, and they introduced several big updates for both new and existing EV owners.

Here’s a summary of what’s changed:

Vehicle Type

Old Tax Rules

New 2025 Rules

Fully Electric Vehicles (EVs)

Zero road tax

Will now pay standard rate VED (currently £190 per year)

Plug-in Hybrids (PHEVs)

Taxed based on CO₂ emissions (often lower)

Still taxed by emissions, but rates increasing

Cars under £40,000

Exempt from premium rate

No change unless EV price exceeds £40,000

Cars over £40,000

EVs previously exempt

Now subject to £390 “expensive car supplement” for 5 years

Used EVs

Previously exempt

Now pay standard annual rate like petrol or diesel cars

In short - electric cars are no longer “free to tax.” Owners will now pay the same standard rate as other vehicles once they’re past the first year of registration.


What About Existing EV Owners?

If you already own an electric vehicle registered before April 2025, you won’t escape the changes. The government has made it clear that all EVs, regardless of age, need to pay VED.

So even if you bought your EV years ago with the promise of free road tax, you’re likely have received that familiar DVLA reminder through the post asking for payment.

This also applies to zero-emission vans, motorcycles, and company cars, which will all face new taxation adjustments from the same date.


The End of the “Electric Free Ride”

The decision has sparked mixed reactions. Some motorists see it as fair - after all, EV drivers still use public roads and infrastructure. Others argue that it discourages adoption at a critical time for the UK’s transition to cleaner transport.

However, even with the tax changes, EVs still remain significantly cheaper to run than petrol or diesel cars thanks to lower fuel and maintenance costs.

Here’s a quick cost comparison:

Cost Factor

Electric Car

Petrol Car

Road Tax (from 2025)

£190/year

£190/year

Fuel Cost (average 10k miles/year)

£400

£1,400

Annual Servicing

£150

£300+

Congestion Zone Charge

£0

£15/day (London)

So while the tax benefit disappears, the long-term savings from electricity and upkeep still give EVs the edge.


What This Means for Used EV Buyers

If you’re thinking about buying a used electric car, the new VED changes could impact your budget - but not necessarily in a bad way.

Used EV prices are already dropping as more models enter the market. Combined with affordable charging options and cheaper maintenance, second-hand EVs remain one of the smartest buys.

However, there’s a crucial step every buyer should take before handing over cash: run a full car history check.

A quick vehicle check on TopCarCheck can reveal:

  • If the EV has any outstanding finance

  • Whether it’s ever been written off or damaged

  • The battery warranty status

  • Verified MOT history and mileage

  • Whether it was previously a taxi or fleet car

This helps you avoid buying a problem car - especially now that EVs are becoming more common in the used market.


Are Hybrids Affected Too?

Yes, plug-in hybrids (PHEVs) are also feeling the changes. While they’re still benefiting from lower CO₂-based rates than petrol cars, those rates have gone up.

Drivers of PHEVs are now paying more in the first-year tax based on their emissions band, followed by a standard annual rate in subsequent years.

For hybrids that cost more than £40,000, the expensive car supplement also applies.


Company Cars and Fleet Vehicles

The tax shake-up didn’t stop with private owners. Company car drivers are also seeing a gradual increase in Benefit-in-Kind (BiK) rates for EVs.

While the rate remains very low compared to petrol or diesel cars (2% in 2024–25), it’s set to rise incrementally each year until 2028. Fleet operators and businesses should plan accordingly, as this will slightly increase the total cost of ownership.


What Happens Next?

You now need to pay attention to your VED renewal notices, especially if you previously ignored them due to the EV exemption.

The DVLA is updating its systems automatically, so even electric car owners who’ve never paid tax before are receiving a renewal reminder.

You can check your current VED status anytime using the DVLA vehicle tax check tool or run a vehicle check via TopCarCheck to see if your EV’s tax status has been updated.


Expert Insight: Is This Slowing Down EV Adoption?

The big question is - is charging EV tax slowing the momentum of electric car adoption in the UK?

Experts suggest it might have had a short-term impact, but the overall EV shift is unstoppable. With charging infrastructure improving, more affordable models hitting the market, and battery reliability increasing (a recent study found that 8 out of 10 used EVs retain over 90% of their original battery health), the benefits of going electric still outweigh the costs.

Moreover, the 2025 tax changes made the EV landscape more transparent. They level the field between electric, hybrid, and petrol cars, giving buyers a more realistic picture of running costs.


What You Should Do Now

If you’re considering buying a used electric or hybrid car, now’s the time to act before the changes take full effect in 2028.

Here’s what we recommend:

  1. Check the car’s history using TopCarCheck to confirm it’s clear of any issues.

  2. Confirm the registration date to see when the new tax will apply.

  3. Compare long-term costs (charging, insurance, tax) before deciding.

  4. Look for models with strong resale value and verified battery health.


Final Thoughts

The new electric and low emission vehicle tax might mark the end of the “free road tax” era, but it’s far from bad news. It’s a sign that EVs have gone mainstream - they’re no longer the exception but the norm.

For UK drivers, this means better choice, fairer taxation, and greater confidence in buying used EVs.

And as always, before you buy any used car - electric or not - make sure you run a comprehensive vehicle check on TopCarCheck. It’s the smartest way to protect your wallet and your next ride.

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