Exact amount electric car owners will pay in VED road tax explained – is your car going to cost you £100s more?
ELECTRIC car owners will be taxed Vehicle Excise Duty or VED from 1st April 2025, having enjoyed a free ride until then.
Currently, VED is charged over 13 bands depending on a car's CO2 emissions, which are measured in grams per kilometre (g/km).
Electric cars don't emit CO2, so have been exempt from VED.
There are two payments; a one-off 'showroom' amount you pay when buying the car, then a yearly standard flat rate.
Based on 2022/23 rates, any car built after 1st April 2017 starts paying from 1g/km CO2.
Between 1-50g/km, the 'showroom' charge is between £10 and £25 for the year depending on your engine.
The 'showroom' tax tops out at £2,365 for cars that emit more than 255g/km.
After that, the yearly standard rate is £165 for petrol or diesel cars, £155 for an Alternative fuel car such as an LPG, hybrid or bioethanol model, and £0 for EVs.
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On top of this, if your car has a list price of more than £40,000, whatever it is, you'll pay £355 a year for the first five years.
That takes the yearly standard flat rate cost to £520 for the first five years.
Starting on 1st April 2025 things change; EV buyers will pay the lowest £10 charge in first-year charges, then a yearly standard rate of £165 per year after that.
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The same rules apply to EVs that cost more than £40,000 - the owner will pay an extra £355 every year for the first five years.
Jeremy Hunt unveiled the new VED plans for EVs early this month, saying: "Because the OBR forecasts half of all new vehicles will be electric by 2025… to make our motoring tax system fairer, I have decided that from April 2025 electric vehicles will no longer be exempt from Vehicle Excise Duty.
"Company car tax rates will remain lower for electric vehicles and I have listened to industry bodies and will limit rate increases to 1ppt a year for three years from 2025."