Until now, electric cars (EVs) have been exempt from road tax – or to be formal Vehicle Excise Duty (VED). From April 2025 the rates of VED will change, increasing running costs for EVs.
This affects companies and monthly leasing costs as well as private drivers.
The key changes are:
the change to the initial (first registration) tax on zero emission vehicles;
the move to standard tax rate in the second year for zero emission cars;
the Expensive Car Supplement discount for zero emission cars costing more than £40,000 will go
From 01 April 2025, cars with 0g/km will pay the lowest first year VED rate of £10 a year (petrol, hybrid and diesel cars emitting between 1-50g/km of CO2 go from £10 to £110, but as the emissions rise the first year rate will go as high as £5,490).
With more and more EVs on the roads, it was inevitable that they would be required to pay road tax at some point. From the second year zero emission cars will be charged £195 per year, which is in line with petrol and diesel. On a three year lease this adds £390 to the cost of a car. But it’s important to note that relative to petrol and diesel cars, the operating costs of EVs are still better value.
The £40,000 Expensive Car Supplement
Since April 2017, cars with a list price exceeding £40,000 have paid an additional annual VED supplement as well as paying the standard rate. This lasts for five years after registration. It’s become known as the Expensive Car Supplement.
Until now, because of their new technology, many electric cars have cost over £40,000 new and carried a premium over the nearest petrol version from the same manufacturer.
To encourage sales, until now electric cars have been exempt, but from 01 April 2025 any zero emission car that costs more than £40,000 will also be required to pay the Supplement for the first five years of registration, adding an additional £395 to the VED. So, a three year lease on an EV could now cost an additional £1,577 over the contract. All leasing costs, whatever the fuel, will see some increases.
However, the good news is that there are more and more new EVs which will sit comfortably below the supplement.
Here are three cars, taken from the CBVC electric cars section, that are below the Expensive Car Supplement (it’s calculated on the manufacturer’s list price plus any extras – so beware, the cheapest Tesla Model 3 is £39,990).
Kia EV3 148kW Air 81.4kWh 5dr Auto £35,995
Monthly business lease From £289.83 ex VAT
Renault Megane E-Tech EV60 160kW Techno Comfort Range 60kWh 5dr Auto £35,995
Monthly business lease From £256.82 ex. VAT and In Stock!
Skoda Elroq 150kW 60 SE L 63kWh 5dr Auto £33,350
Monthly business lease From £317.83 ex VAT
Prices correct as of 13 Feb 2025, based on 12 months initial rental, 48 month term and 5k annual miles.
