UK Electric Vehicle Tax – What Drivers and Businesses Need to Know

The 2025 Autumn Budget introduces important changes for electric vehicles (EVs) that will affect both private drivers and business fleets. From April 2025, EVs will pay standard road tax, and from April 2028, a new mileage-based tax will apply. Understanding these changes now can help you plan your vehicle costs and fleet budgets effectively.

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From 1 April 2025, electric vehicles will be subject to standard Vehicle Excise Duty (VED) just like petrol or diesel cars. This marks the end of the previous exemption for EVs. The exact charge depends on the vehicle’s tax band and registration date, so owners should check their specific VED rate.

In addition, the government will introduce a mileage-based tax called electric Vehicle Excise Duty (eVED) starting 1 April 2028. This new tax applies to both battery electric vehicles (BEVs) and plug-in hybrids (PHEVs). Rates are set at 3p per mile for BEVs and 1.5p per mile for PHEVs, and it will be applied on top of the standard VED.

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Another change affects higher-value vehicles. The threshold for the Expensive Car Supplement, which is an extra VED charge on luxury vehicles, will rise to £50,000 for electric cars from April 2026. This adjustment makes some higher-spec EVs slightly more tax-efficient.

What does this mean for drivers and businesses? EV owners should now budget for standard VED from 2025, and high-mileage drivers should plan for the additional eVED from 2028. For businesses and fleet managers, it is essential to model the total cost of ownership, taking both VED and eVED into account when planning vehicle purchases or leases. Always check the exact charges for your vehicles to stay ahead of costs.

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In summary, EV taxation is evolving. Understanding these changes will help both individuals and companies stay ahead of costs and plan effectively for the coming years. Speak to your us or fleet manager to review your EV costs and ensure your plans reflect the new tax framework.