The DVLA has issued a warning to electric vehicle (EV) drivers, as significant changes to vehicle tax regulations are set to take effect on April 1, 2025. Tax expert Andy Wood from Tax Natives said the developments that could see many motorists facing an annual tax bill of £600.
“Starting in 2025, all electric vehicles priced over £40,000 will incur a new surcharge, fundamentally altering the current tax structure,” says Wood. “Currently, many EVs benefit from a zero-rated Vehicle Excise Duty (VED), aimed at encouraging greener transport options. However, rising car prices mean a substantial number of models now fall into the luxury tax category, defined by a price exceeding £40,000.”
According to Wood: “The new tax framework indicates that any electric or low-emission vehicle registered after 1 April 2025 will incur the lowest first-year rate of vehicle tax, applicable to those with CO2 emissions between 1 and 50 g/km. After the first payment, these vehicles will transition to a standard annual rate of £190, although this may change in 2025.”
He said: “The £600 charge results from combining this standard rate with an additional £410 surcharge for vehicles over the £40,000 threshold. With the average price of new electric vehicles now around £40,000—compared to £30,000 for traditional internal combustion engine vehicles—more than half of newly registered EVs will be impacted by this increase.”
Wood added: “Hybrid and alternatively fuelled vehicles will also see changes, as they will no longer enjoy a £10 discount on their taxes. Their rates will instead be determined based on CO2 emissions, leading to increased costs for older models.”
“For consumers who opted for electric vehicles to reduce their environmental impact and benefit from tax advantages, these new charges will present a significant financial shift,” warns Wood. The DVLA has confirmed these changes, urging drivers to prepare for the evolving tax landscape.
“In summary, as the transition to electric vehicles accelerates, the implications of these tax changes highlight the need for motorists to reassess the financial viability of their choices,” said Wood. “With more EVs surpassing the £40,000 threshold, the landscape for electric vehicle ownership is set to become considerably more complex.”
