From 1 April 2025, electric vehicles (EVs) will have to pay tax in the same way as petrol and diesel vehicles. In 2024, EVs were exempt from paying car tax, which was a great perk for those making the switch to an electric vehicle.
While the tax changes might not help boost the uptake of EVs, there are more initiatives coming. This is after the government confirmed that the new petrol and diesel car ban would come into force by 2030.
Initially the ban was delayed to 2035. In this guide, we'll look at the new tax for EVs and what the government is doing to increase the uptake of EVs.
How much will EV drivers pay for road tax?
The new taxes for EVs are:
- Electric, zero, or low-emission cars registered on or after 1 April 2025. You'll pay £10 from 1 April 2025. From the second payment onwards, you'll pay £195. This is the standard rate.
- Electric, zero, or low-emission cars registered between 1 April 2017 and 31 March 2025. You'll pay the standard rate of £195.
- Electric, zero, or low-emission cars registered between 1 March 2001 and 31 March 2017. You'll pay £20 to tax these vehicles.
Why are EVs being taxed?
Nearly half of what motorists pay for fuel is tax. The rate of fuel duty is 52.95p per litre. The average price for petrol at the time of writing is 140.2p per litre*.
As EVs become more popular, VED and fuel duty will probably drop. The tax revenue from fuel duty and VED accounts for 4% of the entire tax revenue in the UK. So the government is looking at ways to fill the £35 billion tax black hole that could be left when more people buy EVs.
The demand for electric vans and cars has accelerated over the past few years. In fact, retailers sold over 382,000 electric cars in 2024 - up by a fifth on the previous year. But motorists could be put off buying EVs because of the new tax.
What are the costs for EV owners?
Here are some of the main costs for EV owners:
- Initial price: EVs are expensive. GOV.UK says that one in three used electric cars are under £20,000, and 21 brand-new cars on the market are under £30,000.
- Charging: The government says that drivers can save up to £750 a year if they mostly charge their car at home compared to petrol. But this could still increase your electricity costs overall.
- Electric vehicle insurance: A brand-new electric car is around 16%** more expensive to insure than a brand new petrol and diesel car. On average, it's £788 a year. This could be because it's more expensive to source and replace parts.
- Maintenance: EVs generally don't need as much maintenance as a combustion engine. But you'll still need to have your tyres and brake pads checked and potentially a fluid replacement. It's worth speaking to your local garage to find out how much EV maintenance might cost.
“EV purchases are up by a fifth in 2024. However, the news around tax costs may be disheartening for EV considerers, as there are fewer incentives to make the switch to electric. “There's still some debate around the initial costs of buying an EV. But overall, going electric could still save you money in the long run as they can have lower running costs than other vehicles. And they're a lot better for the environment."What our motor insurance expert says
What is the government doing to help the UK’s EV uptake?
Here's a quick look at what else the government is doing to improve infrastructure and support people who are thinking of switching to an EV:
Increasing the number of charging points
At the moment there are over 74,000 chargers in the UK. Last year, 20,000 were added, which is a record according to the government. There are also 24/7 helplines, contactless payment on charge points in public spaces, and up-to-date chargepoint locations. So it's clear there is some progress when it comes to charging your EV, which is great considering the ban is only five years away.
In February, the government announced that over 1,400 electric charging sockets were installed in schools and colleges in the UK since March 2024. The government has also extended the home and workplace chargepoint funding for another year. This should make charging more convenient for school staff and EV drivers.
The government said there's £200 million aside for the chargepoint rollout and £36 billion of private investment in the pipeline. So the UK could see a big increase in the number of EV chargers over the next few years.
Chargepoint grants
Alongside this, there's a variety of UK-wide grant schemes to support new EV charge points outside of homes and workplaces. You might be able to apply for a grant for a chargepoint if:
- You're a renter or own a flat
- You live in a house with on-street parking
You can also get a chargepoint and infrastructure grant for:
- Business staff and fleet car parks
- Landlords, including car parks
- Workplaces and schools (or educational institutions)
Also in England, there's funding for local councils through the Local Electric Vehicle Infrastructure (LEVI). The previous government also planned a Rapid Charging Fund (RCF) to increase the number of charging points at motorway service stations.
More recently, Department for Transport minister Heidi Alexander announced £6 billion of private investment to make charging infrastructure quicker and easier to install. She also announced that planning could be easier for charging infrastructure.
Making the switch to electric vans, wheelchair-accessible vehicles and taxis easier
As well as the improvements to charging infrastructure, the government has also announced £120 million in funding to make switching to 'cleaner' vans, wheelchair-accessible vehicles, and taxis faster and cheaper.
The plug-in grant, which is only for vans and trucks, is being extended for another year to help drivers and businesses transition to zero-emission vehicles. This means businesses and van drivers could receive a grant of up to £2,500 for a new small van. And up to £5,000 for larger vans up to 4.25 tonnes.
Taxi drivers can also get a grant for £4,000 to buy an iconic zero emission black cab or other electric cab model.
This is part of the overall £2.3 billion fund to help industries and consumers switch to electric vehicles.
Low-emission zones
London has an ultra-low-emission zone (ULEZ). Here, the emission levels are even more strict. The ULEZ has recently been extended to cover most of the capital. In the rest of the UK, there are low-emission zones in:
- Bath
- Birmingham
- Bradford
- Bristol
- Portsmouth
- Sheffield
- Tyneside - Newcastle and Gateshead
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*Based on Confused.com's petrol prices tool February 2025
**Confused.com data Q4 2024
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