Electric vehicles (EVs) lost their tax-free status on April 1, as the Government looked to boost dwindling car tax receipts. The changes mean EVs now attract a £195-per-year bill, bringing them in line with most petrol and diesel cars. But while this marks the end of a significant incentive for going electric, savvy drivers are still exploring legal workarounds commonly referred to as electric car tax loopholes to soften the financial blow.
From choosing the correct type of EV to registering under specific schemes or business ownership, there are still a few routes that could reduce your Vehicle Excise Duty (VED) liability.
Understanding the New Electric Car Tax Rules
The 2025 changes mean all electric vehicle owners now pay road tax. Your vehicle’s registration date and value will determine exactly how much you owe.
How Much Is EV Road Tax in 2025?
From April 1, 2025, all electric vehicle (EV) owners in the UK must pay Vehicle Excise Duty (VED) ending years of road tax exemptions. Here’s what you need to know about the new rates:
Standard EV Road Tax (VED) Rates:
| Registration Date | Annual VED Rate |
| From 1 April 2025 (First Year Only) | £10 |
| From 1 April 2025 (Second Year Onwards) | £195 (or £620*) |
| 1 April 2017 – 31 March 2025 | £195 |
| 1 March 2001 – 31 March 2017 | £20 |
Full Road Tax Breakdown by Vehicle Type
Electric cars are now subject to road tax, just like petrol and diesel vehicles.
- New zero-emission cars registered on or after 1 April 2025:
- Pay the lowest first-year rate of VED (£10).
- Move to the standard rate of £195/year from year two.
- EVs registered between 1 April 2017 and 31 March 2025:
- Now pay the standard £195/year road tax.
- Expensive Car Supplement ends for EVs:
- From 1 April 2025, new electric cars with a list price over £40,000 will be subject to an extra £425 per year for five years.
- Total VED: £620/year.
- Older EVs (registered 1 March 2001 – 30 March 2017):
- Move from Band A to Band B, now paying £20/year.
- Zero-emission vans:
- Shift to the petrol/diesel light goods rate, currently £335/year.
- Zero-emission motorcycles and tricycles:
- Will now pay £25/year, aligned with the smallest engine band.
- Hybrids and alternative fuel vehicles:
- Will now be taxed at the same rate as petrol and diesel cars.
Best Insurance Options for Electric Vehicle Owners
As EV owners adjust to new road tax rules, insurance becomes even more crucial in managing the overall cost of ownership.
Here’s a breakdown of four key insurance products EV drivers should consider:
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GAP Insurance for EVs
Electric vehicles can depreciate rapidly, often faster than traditional cars due to evolving technology and government incentives. If your EV is stolen or written off, your insurer typically pays out the current market value, which may fall short of what you originally paid or still owe on finance.
GAP (Guaranteed Asset Protection) Insurance covers the difference, offering peace of mind when it matters most.
Especially for newer EVs priced over £40,000, GAP insurance isn’t just helpful — it’s financially essential.
Note: Some underwriters have increased premiums for EVs due to their faster depreciation rates.
2. Tyre and Alloy Wheel Insurance
EVs are heavier than petrol or diesel cars due to their battery packs. This extra weight puts added pressure on tyres and wheels and when combined with potholes and tight city parking, damage becomes more likely.
Standard insurance usually won’t cover these costs, but a Tyre and Alloy Wheel policy can cover repairs or replacements, potentially saving you hundreds.
3. Cosmetic Bodywork Insurance
Sleek designs and modern finishes make dents and scratches on EVs more noticeable and more costly. Beyond appearance, minor damage can impact resale value or even trigger end-of-lease charges.
Cosmetic Insurance covers scuffs, dents, and paintwork damage without affecting your no-claims bonus. It’s a smart way to keep your EV looking sharp while protecting your investment.
4. Motor Excess Insurance
To keep premiums low, many drivers choose higher voluntary excesses — but if you need to claim, the out-of-pocket cost can sting.
Motor Excess Insurance reimburses your excess after a valid claim, softening the blow and turning a major expense into a minor inconvenience.
Hidden Costs of Owning an Electric Vehicle
Electric vehicles may save money on fuel and maintenance, but there are some hidden costs worth knowing. From higher insurance premiums to expensive repairs and fast depreciation, owning an EV isn’t always as cheap as it seems. Installing a home charger may also require property upgrades. While EVs are still a smart choice for the future, it’s important to plan for these less obvious expenses.
- EV-specific repair and battery replacement costs
- Higher insurance premiums
- Home charger installation and electrical upgrades
- Faster depreciation compared to petrol/diesel cars
- Limited access to EV-specialist garages
Final Thoughts!
The UK’s 2025 road tax changes mark a big shift for EV owners. What you pay now depends on when your vehicle was registered, its value, and emissions. With tax bills rising and incentives winding down, smart decisions around insurance and ownership matter more than ever.
At Quilliam Marr, we help EV owners protect their investment with tailored cover that reduces long-term risks. Whether you lease, finance, or own your car outright, make sure both your vehicle and your wallet are prepared for the road ahead.
