Since the rise of electric vehicles (EVs) in the UK, one significant benefit for drivers has been the exemption from road tax, officially known as Vehicle Excise Duty (VED). For years, this exemption has served as a powerful incentive for people to make the switch to greener, more sustainable transport. However, from 1st April 2025, this will change as EVs will become subject to road tax for the first time.
A Shift in Government Policy
For the last decade, as part of the push to reduce carbon emissions and combat climate change, the UK government has offered various incentives for EV ownership, including zero road tax. This policy was intended to encourage drivers to switch from petrol and diesel vehicles to cleaner electric alternatives. These benefits played a crucial role in the growing adoption of electric vehicles, with many drivers enjoying the financial advantages that came with going green.
However, the government has now announced that, starting from April 2025, EVs will no longer be exempt from VED. Both newly registered and existing electric vehicles will be subject to road tax under a system similar to that of traditional internal combustion engine vehicles. Initially, new EVs will fall into the first-year rate, currently set at £0 for zero-emission vehicles, but after the first year, they will be taxed according to their list price, with many expected to fall into the £165 standard rate. EVs with a list price over £40,000 will also incur an additional £390 annual supplement for five years, as part of the ‘expensive car’ levy.
Why the Change?
The move to tax electric vehicles has raised questions about fairness. Supporters argue that as EVs make up an increasing portion of the vehicle fleet, it’s reasonable that they contribute to road maintenance and infrastructure costs, which are largely funded through VED. With the loss of revenue from traditional fuel duties as more drivers transition to electric cars, the government faces pressure to find alternative sources of income to support the country’s roads.
Advertisement
However, critics point out that the tax exemption was one of the most compelling reasons for many to switch to electric, helping offset the higher upfront costs of EVs compared to conventional cars. They argue that taxing EVs could slow down the adoption of electric vehicles at a time when reducing emissions remains a critical goal in the fight against climate change.
A Period Without Tax
Electric vehicles have enjoyed a period of nearly 10 years without the burden of road tax, giving early adopters a clear financial advantage. With fuel prices climbing and traditional petrol and diesel vehicles subject to rising taxes due to their environmental impact, many saw EVs as a way to reduce their motoring costs significantly. Now, with road tax looming, some may feel that this advantage is being eroded.
Is It Right to Tax EVs?
The question remains: is it right for electric vehicles to be taxed? On the one hand, as EVs become more mainstream, it’s understandable that they should contribute to the upkeep of roads like all other vehicles. Yet, on the other hand, given their environmental benefits, should the government continue offering incentives to encourage more drivers to make the switch?
Taxing EVs could be seen as a step back from the nation’s ambitious Net Zero targets, potentially discouraging those who are on the fence about making the switch from petrol or diesel.
As April 2025 approaches, it’s likely that this debate will intensify. While the new policy brings EVs in line with other vehicles on the road, it also highlights the difficult balance the government must strike between incentivising green choices and maintaining the country’s infrastructure.
In the end, drivers must weigh up the long-term benefits of owning an electric vehicle, despite the incoming taxes, against the broader environmental imperative to reduce emissions. Will this policy change alter the appeal of EVs, or is it a fair step towards creating a level playing field for all road users? Time will tell.
