How Electric and Hybrid Vehicles Are Taxed Differently Under Current VED Rules | UK 2025 Guide

With the UK government pushing for greener transport, the taxation of electric and hybrid vehicles has evolved significantly. The Vehicle Excise Duty (VED), commonly known as road tax, applies differently to electric vehicles (EVs) and hybrids compared to petrol and diesel cars. Understanding these differences is crucial for buyers and owners to budget effectively and comply with the law. This article breaks down how electric and hybrid vehicles are taxed under current VED rules, highlights key 2025 changes, and explains how VED prices affect your total cost.

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Road tax in the UK is designed to encourage cleaner vehicle choices by linking charges to emissions and vehicle type. Electric and hybrid vehicles benefit from different rates and exemptions compared to traditional fuel cars. However, recent changes mean that electric vehicles are no longer exempt from paying road tax, and hybrids face new standard rates. This guide explains these tax structures, helping you understand what to expect when owning or buying an electric or hybrid vehicle in 2025.

What Is Vehicle Excise Duty (VED)?

VED is an annual tax levied on vehicles used or kept on public roads in the UK. The amount depends on factors such as:

• Vehicle type (car, van, motorcycle)

• Fuel type (petrol, diesel, electric, hybrid)

• CO₂ emissions

• Registration date

• Vehicle list price (for luxury car supplements)

How Are Electric Vehicles Taxed Under Current VED Rules?

1. First-Year VED Rates for Electric Vehicles

• From 1 April 2025, new electric cars registered will pay a first-year VED of £10, reflecting their zero-emission status but removing previous exemptions.

• This first-year rate applies only for the initial 12 months after registration.

2. Standard VED Rates from Year Two Onwards

• From the second year, electric vehicles pay the standard rate of £195 per year.

• This applies to all electric cars registered from 1 April 2017 onwards.

• Previously, many EVs were exempt from paying VED, but this exemption ended on 1 April 2025.

3. Reduced Rates for Older Electric Vehicles

• Electric vehicles registered between 1 March 2001 and 31 March 2017 pay a reduced VED rate of £20 per year.

4. Expensive Car Supplement (Luxury Car Tax)

• Electric vehicles with a list price exceeding £40,000 pay an additional £425 per year for five years from the second year of registration.

• This means luxury EV owners could pay up to £620 annually in road tax.

5. Electric Vans and Motorcycles

• Zero-emission vans now pay the same rate as petrol and diesel light goods vehicles, currently around £335 per year.

• Electric motorcycles and tricycles pay the rate for the smallest engine size, approximately £25 per year.

How Are Hybrid Vehicles Taxed Under Current VED Rules?

1. Removal of Hybrid Discounts

• The previous £10 annual discount for hybrids and alternative fuel vehicles (AFVs) was removed from 1 April 2025.

• Hybrid owners now pay the standard VED rate of £195 per year if registered on or after 1 April 2017.

2. VED Rates Based on Registration Date and Emissions

• Hybrids registered before 1 April 2017 pay rates based on their CO₂ emissions, which can vary widely.

• Newer hybrids pay the flat standard rate regardless of emissions.

3. Expensive Car Supplement for Hybrids

• Like electric vehicles, hybrids with a list price over £40,000 are subject to the £425 luxury car supplement for five years after the first year.

Why Are These Changes Important?

• The removal of exemptions and discounts means electric and hybrid vehicle owners now face similar road tax costs to petrol and diesel cars.

• The introduction of the expensive car supplement for EVs reflects their increasing market value but has sparked debate about its impact on EV adoption.

• These changes encourage buyers to consider total cost of ownership, including road tax, when choosing greener vehicles.

How to Check Your Vehicle's Tax Using VED Prices Tools

• Use an online VED prices calculator or the CarVeto car tax calculator to estimate your exact road tax based on your vehicle's registration date, emissions, and price.

• These tools help you budget accurately and compare tax liabilities before purchasing.

Key Takeaways

• Electric vehicles pay a £10 first-year VED from April 2025, then £195 standard rate annually.

• Hybrids lose their previous £10 discount and pay the standard £195 rate if registered after April 2017.

• Vehicles over £40,000 list price pay an extra £425 luxury car supplement for five years.

• Older electric vehicles registered before 2017 pay a reduced rate of £20.

• Electric vans and motorcycles have specific VED rates aligned with their vehicle types.

Frequently Asked Questions (FAQs)

Q1: Do electric vehicles still get free road tax?No, from 1 April 2025, electric vehicles must pay road tax like other cars.

Q2: How much is the luxury car tax for electric vehicles?It is £425 per year for five years, added to the standard road tax for EVs costing over £40,000.

Q3: Are hybrids taxed the same as petrol cars now?Yes, hybrids registered after 1 April 2017 pay the standard £195 rate without discounts.

Q4: Can I pay my road tax monthly?Yes, monthly payments are available via direct debit, often with a small surcharge.

Q5: How do I find out my exact road tax cost?Use online VED prices calculators like the CarVeto car tax calculator by entering your vehicle details.

Conclusion

The taxation of electric and hybrid vehicles in the UK has changed significantly, reflecting the government's evolving approach to encouraging cleaner transport while ensuring fair contributions to road maintenance. Electric vehicles now pay a modest first-year rate followed by a standard annual charge, with luxury EVs subject to an additional supplement. Hybrids lose their previous discounts and pay standard rates based on registration date. Understanding these VED prices and how they apply helps vehicle owners and buyers plan their finances and make informed choices. Using tools like the CarVeto car tax calculator simplifies this process and provides clarity on your exact road tax liability.