What to expect with the UK's latest road tax changes

If you or your company is looking to go electric then you don’t need to let tax changes prove to be a barrier.

Here's a quick heads-up on the upcoming tax changes that might sway your decision — especially if your dream car is nudging £40,000 or more.

If you made the decision to go fully electric before 31 March, you’ll skip the first-year road tax (Vehicle Excise Duty, or VED) altogether. But from 1 April, that goes up to £10 — not a huge jump, but still worth noting.

The bigger shift comes in year two. Up until now, EVs have been totally VED-free, and hybrids have had a discounted rate. But for EVs registered between 1 April 2017 and 31 March 2025, they will start paying road tax in year two, from 1 April 2026. The standard rate is £195 a year.

Hybrids face a tougher change, though. Cars with emissions above 75g/km will pay much higher rates next year, and VED rates will rise with RPI year on year. This means that EVs are still a considerably more tax-efficient method. 

If your new electric car costs more than £40,000 (based on RRP, not the deal you got), there’s more to consider. For the first time, EVs will also be hit with the “luxury car” tax — formally known as the Expensive Car Supplement. That’s an extra £425 a year for five years, on top of the standard £195. Post-April that's coming in up to £2,125 over the next six years.

There are still plenty of great electric cars under the £40,000 mark—we’ve got a few of our favourites here if you fancy a look. Just remember, the list price counts for tax, not any discounts you might get.

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What's next?

Clear enough?  Let’s make this actionable. Here’s where Gofor can help:

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Company fleet leasing – Flexible, tax-efficient, and fully managed. Our fleet solutions will ensure you have a cost-effective EV-ready fleet, and one that saves you time, money and hassle.
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EV salary sacrifice – A win for your people and your wider company finances. Employees get a brand new electric car with tax savings, and you enhance your benefits offering with an environmentally friendly, super engaging staff benefit.

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Thinking about making your next company lease an electric one?

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‍Get in touch to arrange your fleet consultation

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For the latest information on all things Vehicle Excise Duty and Expensive Car Supplement, visit gov.uk  

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