EVs and road tax: everything you need to know

As road tax rules for EVs are changing, it’s a hot topic for many drivers. To keep things simple, we’ve broken down everything you need to know - so you know exactly what to expect.

From 1st April 2025, EVs will no longer be exempt from road tax - but there’s still good news! There are still discounts to be had for EV drivers, meaning you’ll continue to save money while driving electric.

If you’re an Octopus EV salary sacrifice or Intelligent EV customer you don't need to pay road tax (aka VED) - we take care of everything for you.

If you’re not with Octopus EV:

If you don’t have an EV with us, you will need to register your car at the Post Office or via the Government website.

You'll need your car registration number, and the 15-digit reference number from your vehicle log book (V5C), a new keeper slip, or a recent reminder letter from DVLA (V11). The process is simple and only takes a few minutes. You can then either pay your annual road tax as one lump sum, or set up a monthly direct debit.

Important to note: you need to register your vehicle even if you are tax-exempt for any reason (such as disability). Your tax bill might be £0, but the info is needed for administrative purposes.

You’ve probably seen the term “VED” pop up whenever road tax is mentioned, but what does it actually mean?

VED (Vehicle Excise Duty) is just the official name for road tax. There’s no difference between the two - it’s the same tax, just with a fancier title.

The amount of road tax you pay is broadly based on your vehicle’s tailpipe CO₂ emissions, with the age and list price also contributing.

From 1st April 2025, new EVs with a list price of under £40,000 will fall under the standard rate of tax BUT with a special first-year rate.

For the first year you own your EV, you’ll pay just £10 for the entire year. For years following, you’ll pay £195 – that’s £16.25 per month.

It’s a little different – though not by much. Here’s how:

• EVs registered between 1 April 2017 and 31 March 2025 pay the standard rate of road tax. They do not receive the first-year £10 discounted rate.
• EVs registered between 1 March 2001 and 31 March 2017 will move to the ‘Band B’ rate of £20 per year.

EVs that cost £40,000 or more are subject to the Premium Car Surcharge, as of 1st April 2025. This means that:

• Newly registered EVs will cost £10 to tax in the first year
• From years 2-6, they will cost £520 to tax thanks to the Premium Car Surcharge
• From year 6 onwards, they will be taxed at the standard rate (£195)

Other than the savings on road tax, there are plenty of other areas where an EV saves you money – both major and more modest amounts – and this starts to add up to some serious savings quickly. For example:

• Fuel: it costs significantly less to fully charge an EV battery than to fill the tank of an equivalent petrol vehicle – especially if you take advantage of specialist tariffs like Intelligent Octopus Go to get cheaper energy and automatically charge your EV when energy is cheapest.
• Salary sacrifice tax savings: If you get your EV via our salary sacrifice scheme, we take your lease payments from your pre-tax salary. This means that your taxable income decreases – and so does your tax bill as a result.
• Clean air zones: EVs are exempt from both the London Congestion Charge and the Ultra Low Emission Zone (ULEZ) charge – so EV drivers based around the capital can save money. With many other cities aiming to set up clean air zones, you have the potential to save even more in the coming years.

Let’s be honest: right now, EVs offer the smartest, most exciting driving tech out there. EV drivers save money on fuel and help to lower emissions – and have an absolute blast driving the latest cars whilst doing so.

Find out more about Intelligent EV or see what our salary sacrifice scheme could offer your business.