DVLA warns electric car drivers of new £600 charge

The DVLA has issued a warning to drivers of electric vehicles (EVs) as major changes to vehicle tax rules come into force on 1 April 2025. Tax expert Andy Wood of Tax Natives said the changes could leave many drivers facing an annual tax bill of £600.

“From 2025, all electric vehicles priced over £40,000 will be subject to a new surcharge, fundamentally changing the current tax structure,” says Wood. “Currently, many electric vehicles benefit from the zero-rated Vehicle Excise Duty (VED), which aims to encourage greener transport options. However, rising car prices mean that a significant number of models are now falling into the luxury tax category, defined as those priced over £40,000.”

Mr Wood said: “The new tax framework means that any electric or low emission vehicle registered after 1 April 2025 will be subject to the lowest rate of vehicle tax in its first year, applying to vehicles with CO2 emissions between 1 and 50g/km. After their first payment, these vehicles will move to the standard annual rate of £190, although this may change in 2025.”

He said: “The £600 charge is a combination of this standard rate and an additional surcharge of £410 for vehicles above the £40,000 threshold. With the average price of new electric vehicles currently around £40,000 – compared to £30,000 for traditional combustion engine vehicles – more than half of newly registered electric vehicles will see this increase.”

Wood added: “Hybrid and alternative fuel vehicles will also see changes as they will no longer benefit from the £10 discount on tax. They will instead be rate-set based on CO2 emissions, leading to higher costs for older models.”

“For consumers who have switched to electric vehicles to reduce their environmental impact and take advantage of tax relief, these new charges will represent a significant financial change,” warns Wood. The DVLA has confirmed the changes, urging drivers to prepare for the changing tax landscape.

“In summary, as the transition to electric vehicles accelerates, the implications of these tax changes underline the need for drivers to reassess the financial viability of their choices,” said Wood. “With more electric vehicles crossing the £40,000 threshold, the landscape for electric vehicle ownership will become significantly more complex.”