Car tax: electric vehicle drivers to face road tax hikes in 2025 - DVLA Vehicle Excise Duty changes explained

• Car tax bills will rise significantly for many drivers starting April 2025, with some bills increasing by hundreds of pounds
• Electric vehicle owners will lose their current exemption from Vehicle Excise Duty
• EVs will be taxed in the same way as combustion engine vehicles, with the removal of the £0 tax band for low-emission vehicles
• A £410 'luxury car tax' will apply to vhicles valued over £40,000, impacting many electric vehicles due to their high costs.
• Up to 70% of EV owners could be affected by the new charges, including those with second-hand EVs
• Experts have warned that the changes will penalise many drivers

Many drivers could face substantial increases in car tax, with some bills rising by hundreds of pounds next year.

Currently, electric car owners are exempt from Vehicle Excise Duty (VED), but this exemption will end in April, meaning owners of popular electric vehicles (EVs) like the Tesla Model 3, MG4, Porsche Taycan and Mercedes EQS will see higher taxes

The DVLA has said that the new charges are intended to ensure that all drivers contribute more fairly to road use.

It said: “From 1 April 2025, drivers of electric and low emission cars, vans and motorcycles will need to pay vehicle tax in the same way as drivers of internal combustion engine (ICE) vehicles do.

“This change will apply to both new and existing vehicles and will ensure all drivers begin to pay a fairer tax contribution.

“This new measure effectively removes band A under the graduated VED system which is currently £0. Vehicles in this band will be required to move to the first band where a rate becomes payable.”

VED is used to contribute to the maintenance and development of the road network, and helps fund infrastructure and services related to road transport. Historically, EVs have been exempt from VED or faced lower rates due to their low emissions - but that will change.

The added 'luxury car tax' - a £410 extra fee applied to vehicles valued over £40,000 - could also significantly increase costs for some electric car owners. According to DVLA data, nearly 31% of UK vehicles are already subject to the fee.

While this is a significant expense for petrol cars, that cost threshold is surpassed by many EVs due to their high upfront costs, with recent analysis suggesting that up to 70% of electric vehicle owners could be affected by the new charges.

EVs use large, high-capacity lithium-ion batteries, which are expensive to produce, and many also incorporate cutting-edge technology like sophisticated battery management systems, electric drivetrains and regenerative braking systems.

For instance, Tesla has only one model that avoids the tax, while brands like Ford and Toyota have none. Owners of second-hand EVs could also incur the luxury tax, with luxury car tax applied for the first five years of a vehicle’s registration.

Society of Motor Manufacturers & Traders (SMMT) chairman Mike Hawes has warned that many road users will face financial penalties due to these upcoming changes.

He has said: “Next year’s planned changes to extend the VED expensive car supplement to EVs will see a significant portion of these zero-emission vehicles classed as ‘luxuries’, right when manufacturers are mandated by law to increase the proportion they sell.”

What do you think about the upcoming changes to car tax and their impact on electric vehicle owners? Do you believe the new measures are fair, or will they create financial challenges for drivers? Share your thoughts and experiences in the comments section.