DVLA New Vehicle Tax: First-Year Rate, Supplement, and Penalties

Since 1 April 2025, the DVLA charges Vehicle Excise Duty on electric cars for the first time. A new zero-emission car pays £10 in its first year on the road, then £200 a year after that, the same standard rate as any petrol or diesel car registered since April 2017. Electric cars already on the road before April 2025 have also been pulled into the system and now pay the £200 standard rate at their next renewal.

What Changed on 1 April 2025

Electric cars, vans, and motorcycles used to be fully exempt from vehicle tax. That exemption ended under sections 10 and 11 of the Finance Act 2023, which brought zero-emission vehicles into the same tax framework as everything else on the road.¹ The change applies both to new registrations from April 2025 onwards and to EVs already registered before that date.²

Hybrids lost something too. The £10 annual discount that used to apply to alternatively fuelled vehicles has been removed, so hybrids now pay the same rate as petrol and diesel cars.²

First-Year Rate for a New Electric Car

When any car is first registered, it pays a one-off first-year rate based on CO2 emissions. For a zero-emission car that rate is £10, the lowest band on the scale. For comparison, a petrol car emitting 131–150 g/km pays £560 in its first year, and a high-emission car over 255 g/km pays £5,690.³

You settle this first-year payment when the car is registered, usually at the dealership as part of the on-the-road price, so most buyers never handle it directly.³

Standard Annual Rate After Year One

From the second year onwards, every car registered on or after 1 April 2017 pays a flat £200 a year. This is the same regardless of fuel type or emissions, so a zero-emission hatchback and a V8 diesel pay the same standard rate.²

Zero-emission cars registered between 1 April 2017 and 31 March 2025, which used to pay nothing, now pay this same £200 annual rate. Older electric cars registered before that window move to the appropriate rate for their date of first registration.⁴

Electric Vans and Motorcycles

Electric vans now pay the standard light goods vehicle rate. For most electric vans registered on or after 1 March 2001, that is £360 a year. Electric motorcycles and tricycles pay £27 a year.⁵

The Expensive Car Supplement

This is the part that catches EV buyers out. Cars with a high list price pay an extra £440 a year on top of the £200 standard rate, bringing the annual bill to £640. The threshold is £40,000 for petrol, diesel, and hybrid cars, but £50,000 for electric vehicles. The higher EV threshold was introduced in November 2025 to reflect the fact that battery costs push electric list prices above their petrol equivalents.⁶

The £50,000 EV threshold also applies retroactively to electric cars registered between 1 April 2025 and 31 March 2026. If you registered an EV costing between £40,000 and £50,000 during that first year, you won’t owe the supplement. Zero-emission cars registered before 1 April 2025 are exempt from the supplement altogether.⁶

“List price” means the manufacturer’s recommended retail price including options and VAT at the time of first registration. That figure follows the car for life. It doesn’t matter what you actually paid or what the car is now worth. You pay the supplement for five years, starting from the second time the vehicle is taxed, so years two through six of ownership.² Adding a larger battery or a premium trim tips a lot of popular EVs over £50,000, so it’s worth checking the list price on the order sheet before you sign.

How to Pay

You tax your vehicle online at GOV.UK using a reference number from one of three documents: a recent DVLA reminder letter, your V5C log book in your name, or the green new keeper slip if you have just bought the car. Payment is by Direct Debit, debit card, or credit card.⁷

You can pay the full year up front, pay every six months, or spread it monthly by Direct Debit. Splitting the payment costs slightly more. For a car at the £200 standard rate:

Single annual payment: £200
Twelve monthly Direct Debit instalments: £210 (a 5% surcharge)
Single six-month payment: £110
Six-month Direct Debit: £105

The six-month Direct Debit is the cheapest option if you would rather not pay for the whole year at once.⁸

One quirk worth knowing: you still have to tax a vehicle even if it qualifies for a £0 rate. A zero rate is not the same as no tax at all, and the DVLA needs the record to show the vehicle is on the road.⁷

Refunds, SORN, and Exemptions Still Available

When you sell, transfer, or scrap a vehicle, the DVLA automatically refunds any full remaining months of tax by cheque to the name and address on the log book, and cancels any Direct Debit. The refund is calculated from the date the DVLA is notified, not the date of sale, so delay costs you money. The 5% monthly Direct Debit surcharge is not refundable.⁹

If a vehicle is off the road and kept on private land, you can make a Statutory Off Road Notification (SORN) to stop paying tax and insurance. A SORN stays valid until you tax the vehicle again, sell it, export it, or scrap it. The only permitted use on public roads is driving directly to and from a pre-booked MOT appointment.¹⁰

Disabled drivers and passengers can still claim a full exemption from vehicle tax on one vehicle at a time. Organisations providing transport for disabled people also qualify, except ambulances.¹¹

Penalties if You Don’t Pay

If your tax lapses and you have not made a SORN, the DVLA issues an automatic Late Licensing Penalty of £80, reduced to £40 if paid within 33 days.¹²

Get caught driving untaxed and the out-of-court settlement is £30 plus one and a half times the outstanding tax. If the case reaches a magistrates’ court, the fine rises to £1,000 or five times the tax owed, whichever is greater, and to £2,500 if you had a SORN in place but drove the vehicle anyway. The DVLA can also clamp or impound an untaxed vehicle, with a £100 clamp release fee, a £200 impound release fee, and £21 per day in storage charges once it reaches the pound.¹²

1
UK Parliament. Vehicle Excise Duty and Zero Emission Vehicles
2
GOV.UK. Vehicle Tax for Electric, Zero and Low Emission Vehicles
3
GOV.UK. Vehicle Tax Rates
4
GOV.UK. Vehicle Tax for Electric, Zero and Low Emission Vehicles – Section: Electric, Zero or Low Emission Cars Registered Between 1 April 2017 and 31 March 2025
5
GOV.UK. V149 Rates of Vehicle Tax April 2026
6
GOV.UK. Vehicle Tax Rates – Section: Vehicles With a List Price of More Than 40000
7
GOV.UK. Tax Your Vehicle
8
GOV.UK. Vehicle Tax Rates – Section: Rates for Second Tax Payment Onwards
9
GOV.UK. Cancel Your Vehicle Tax and Get a Refund
10
GOV.UK. When You Need to Make a SORN
11
GOV.UK. Vehicles Exempt From Vehicle Tax
12
GOV.UK. DVLA Enforcement of Vehicle Tax, Registration and Insurance Offences