We have been promoting the no-brainer tax benefits of electric car ownership to our customers with companies for many years. Still, when a dental customer told me he was rushing to purchase his next new electric car before 31 March to save £2k on expensive car road tax, AKA Vehicle Excise Duty (VED), which comes into force on 1 April, I wasn’t sure why he was rushing.
After some research, I found that my customer’s new electric car has a cost ‘list’ price of over £40,000, so he will be liable for the ‘expensive car supplement’ due from 1 April 2025. Whilst I knew about the £195 a year road tax for electric cars that comes in from 1 April 2025, I had not realised there would be a supplement for expensive cars at a hefty £2,125 spread over 5 years from the second to the sixth year of registration if the electric car is first registered after 1 April 2025. It was paying for this supplement my customer was keen to avoid, and as a result, I now have three money-saving tips to share.
First, here is a summary of Electric car tax rates from 1 April 2025
Electric cars first registered on or after 1 April 2025:
You’ll pay the lowest rate of tax, currently £10. From the second year, the standard rate kicks in, and you’ll need to pay £195 a year, the same as petrol and diesel owners pay now (if they have a car first registered after 1 April 2017). If your electric vehicle costs £40,000 or more when new, the expensive car supplement of £425 will be added to the standard rate for the second to the sixth year of registration.
Electric cars first registered between 1 April 2017 and 31 March 2025:
You’ll pay £195 per year from April 2025. The £40,000 expensive car supplement is not backdated, so an electric car first registered in 2024 will not attract the supplementary rate of £425 on top of the standard rate.
Electric cars first registered between 1 March 2001 and 31 March 2017:
You’ll pay the A band, which is £20 a year for the 2025/26 tax year.
Tip 1: Renew Your Car Tax Early
You can renew your car tax before 1 April 2025 if you own an electric car. This will allow you to benefit from the VED exemption and avoid the £195 charge for another 12 months. Use your car’s registration number and the reference number from your V5C logbook to renew online.
Tip 2: Register Expensive Cars Before 1 April 2025
If you plan to purchase a new electric car with a list price of over £40,000 and want to avoid paying the expensive car supplement, ensure it’s registered by 31 March 2025.
Tip 3: Apply for a Work Place Charger Grant Before 1 April 2025
If you need to get a charger installed at your home and have your company address registered there, you will want to check out these grants that will expire at the end of March: Electric Car Charging Grants for Dentists Until 31 March 2025