Electric vehicle (EV) owners now face significantly higher tax costs following changes to Vehicle Excise Duty (VED) introduced in April 2025.
All new EVs registered from 1 April 2025 must pay VED, with a £10 first-year rate followed by the standard annual rate of £195. In addition, EVs with a list price over £40,000 are now subject to the Expensive Car Supplement (ECS), adding £425 per year for five years. This could bring the total five-year tax cost to around £3,100.
The ECS, originally introduced in 2017, was designed to target premium vehicles. However, the £40,000 threshold has not been adjusted for inflation, meaning more mid-range EVs are now affected.
John Cassidy, managing director of sales at Close Brothers Motor Finance, criticised the decision to apply VED to EVs. He said: “The removal of tax incentives, such as applying VED to EVs, also takes away incentives for buyers to make the switch.”
He warned that EV adoption targets may now be harder to meet: “This will also make the Government’s targets, such as the Zero Emission Vehicle (ZEV) mandate and the proposed 2030 ban on new petrol and diesel vehicles, harder to achieve.”
Cassidy also noted that high EV purchase prices, energy concerns, and infrastructure limitations continue to hold back private demand: “The initial costs of EVs, poor charging infrastructure and concerns over electricity bills put prospective buyers off.”
Despite these concerns, the Society of Motor Manufacturers and Traders (SMMT) reported that battery electric vehicles maintained a market share of more than 20% in April, following a record March.
A Government spokesperson pointed to strong EV sales in 2024: “There are also more than 75,000 public chargepoints now available in the UK, with a new one installed every 29 minutes.” They added: “We’re investing over £2.3billion to support industry and consumers make the switch, tapping into a multibillion-pound industry that will create high paid jobs for decades to come, make the UK a clean energy superpower and help deliver our Plan for Change.”
Article sourced via GB News
