UK Implements New EV Taxes, Ending Longstanding Exemptions

Electric vehicles in the UK are now subject to vehicle excise duty and a luxury car tax, raising concerns about affordability and adoption rates.

As of April 1, 2025, all EVs in the UK are required to pay vehicle excise duty (VED), starting at £10 in the first year and £195 annually thereafter.
A £425 annual luxury car tax now applies to new EVs priced above £40,000 for years two to six after registration, disproportionately affecting EVs due to higher upfront costs.
The £40,000 luxury tax threshold, unchanged since 2017, has drawn criticism for penalizing mid-range family EVs and creating financial barriers to adoption.
Critics, including industry experts and motoring groups, warn the new taxes could deter consumers from switching to EVs during a critical phase of the zero-emission vehicle transition.
The Treasury defends the changes as necessary for fiscal stability while maintaining incentives for EV adoption, emphasizing the importance of the zero-emission vehicle mandate to meet 2030 and 2035 targets.