The UK government will remove tax exemptions for electric vehicles (EVs) priced above £40,000 starting April 1, 2025, subjecting them to the country’s expensive car supplement road tax.
Under the new policy, owners of newly registered EVs exceeding the price threshold will pay an additional £425 annually for five years, totaling £2,050 over the period.
See also: UK Expected to Ease ZEV Mandate as Pressure Mounts from Automakers
The tax reform, first announced in late 2022, will also require existing EV owners to begin paying the standard Vehicle Excise Duty (VED) from the same date.
The changes will extend to electric light commercial vehicles, which will be taxed at the petrol and diesel van rate of £290 per year, while electric motorbikes and three-wheelers will transition to the lowest engine-size tax rate of £22 annually.
The revised tax framework is expected to generate over £500 million annually, offsetting lost fuel tax revenue.
See also: UK Electric Van Sales Continue to Rise Despite Overall Market Decline
Despite the upcoming tax policy shift, the UK’s battery electric vehicle (BEV) market showed resilience in February, accounting for over 25% of total vehicle registrations amid a broader industry slowdown.
While combustion engine models remain dominant, sales in that segment have declined.
Source: everyvehiclelease.co.uk
