Electric vehicles (EVs) have been a popular choice for drivers looking to save on fuel costs and enjoy the benefits of zero road tax. But that’s about to change. From April 2025, the UK government will remove the Vehicle Excise Duty (VED) exemption for EVs, meaning all electric car owners will start paying road tax. Here’s what you need to know and how it could impact your driving costs. At Car Leasing Made Simple, we’re committed to keeping you informed so you can make the best choices for your motoring needs.
The New Road Tax Rules for EVs
Starting April 1, 2025, all new and existing EVs will be subject to VED charges. Here are the key points. Learn more about how road tax changes impact EV leasing:
- First-Year Tax: EVs registered after April 1, 2025, will pay £10 in their first year. This is significantly lower than the first-year tax for petrol or diesel cars, but it’s a change from the current exemption.
- Annual Standard Rate: From the second year onwards, EVs will be charged £195 annually, bringing them in line with traditional combustion engine vehicles.
- Expensive Car Supplement: EVs with a list price over £40,000 will face an additional annual charge of £410 for the first five years, on top of the standard rate. This ‘expensive car supplement’ is already applied to high-value petrol and diesel cars.
Why Is the Government Making This Change?
The exemption from road tax was originally introduced to encourage the adoption of electric vehicles, supporting the transition to greener transport. However, as EVs have grown in popularity and now make up a significant portion of new car sales, the government is looking to balance its tax revenues. The move is part of a broader plan to ensure fair contributions from all road users, regardless of fuel type. Read more about why leasing could be your best option in 2025.
What Does This Mean for EV Drivers?
The introduction of VED for EVs will slightly increase the cost of ownership. Here’s how:
- Increased Annual Costs: Drivers of new EVs will need to budget for an additional £195 per year, or more for higher-value cars.
- Impact on Premium Models: Luxury EVs priced above £40,000 will cost an extra £410 annually for the first five years, making leasing an even more attractive option for these vehicles.
How Can You Plan Ahead?
If you’re considering an EV or already drive one, now is the time to explore your options and plan for these changes. Check out our EV leasing options here. Here are a few strategies:
- Lease Before the Changes Take Effect: Leasing an EV before April 2025 means you can enjoy two years of VED-free driving. Many leasing deals also include fixed monthly payments, helping you manage your budget more effectively.
- Consider Total Ownership Costs: While EVs are losing their road tax exemption, they still offer savings on fuel and maintenance compared to petrol or diesel cars. These factors make them a cost-effective choice in the long run.
- Explore Used EV Leasing: Used EVs could be a budget-friendly option to avoid the high upfront costs of premium models while still enjoying the benefits of electric driving.
Why Leasing Is a Smart Move Now
Leasing offers flexibility and cost control, making it an ideal solution for adapting to these tax changes. At Car Leasing Made Simple, we’re here to help you find the perfect EV lease to suit your budget and needs. Explore our latest EV deals and see how we can simplify your transition to electric driving.
- Fixed Costs: Leasing ensures predictable monthly payments, so you’re not hit with surprise expenses.
- Avoid Depreciation Risks: As the market adapts to these changes, leasing protects you from potential drops in resale value.
- Upgrade Flexibility: With leasing, you can switch to a newer model every few years, ensuring you’re always driving the latest technology.
Final Thoughts
The introduction of road tax for EVs is a significant change, but it doesn’t have to be a deal breaker. With careful planning and the right leasing deal, you can continue to enjoy the many benefits of driving electric while staying ahead of the curve.
Ready to explore your options? Get in touch with Car Leasing Made Simple today to secure the best EV leasing deals before the new tax rules take effect!