Electric vehicle (EV) owners in the UK could save money on their car tax by renewing before 1 April 2025, when significant changes to Vehicle Excise Duty (VED) rates take effect.
Under current rules, electric cars are exempt from road tax. However, from 1 April 2025, the government will introduce VED charges for EVs, ending the tax-free status that has incentivised the shift away from petrol and diesel cars.
The Tax Loophole
Motorists whose car tax is due for renewal around this period can take advantage of a loophole by renewing in March 2025, securing the current lower rates before the price hike. Since VED is typically paid either annually or in six-month increments, renewing before April means drivers can delay paying the higher charges for up to a year. This means EV owners could potentially avoid the new standard £195 annual rate that will apply to zero-emission cars registered after 1 April 2017.
Government’s Justification for the Tax Hike
The decision to tax electric cars comes as the Treasury looks to recoup losses from declining fuel duty revenue. Chancellor Jeremy Hunt first announced the change in the 2022 Autumn Statement, stating that “it is only fair that all road users pay their share towards maintaining the country’s roads.”
While some industry experts argue that this move could slow EV adoption, the government insists that the shift is necessary as electric cars become more mainstream.
What EV Owners Should Do
Drivers who want to take advantage of this tax-saving opportunity should check their renewal dates and pay their car tax before 1 April 2025. The DVLA allows early renewal in advance, meaning those with renewals due after April 2025 could renew in March at a lower rate.
However, once their tax period expires in 2026, they will have to pay the new, higher rates unless government policy changes again.
As the tax increase approaches, EV owners should act fast to avoid unnecessary extra costs—while they still can.
