New Electric Vehicle Incentives in 2025: What You Need to Know
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Electric vehicles (EVs) are becoming increasingly popular across the UK, and the government is stepping up its support with a fresh wave of incentives designed to make going electric more affordable and accessible than ever. If you’re thinking about switching to an EV, or if you’re in the business of leasing or selling them, here’s everything you need to know about the latest incentives available in 2025.
£650 Million Grant Scheme: Up to £3,750 Off New EVs
The UK government has launched a new £650 million grant scheme to encourage private drivers to buy electric vehicles. Eligible new EVs priced under £37,000 can receive up to £3,750 off the purchase price. This scheme is available through participating manufacturers and dealerships and will run until March 2029.
One important detail: the scheme prioritises British-made and environmentally sustainable vehicles, meaning certain brands like Tesla and many Chinese manufacturers are excluded. The goal is to support domestic production while making EVs more affordable for everyday drivers.
Changes to Vehicle Excise Duty (Road Tax)
From April 1, 2025, electric vehicles will no longer be exempt from Vehicle Excise Duty (VED), commonly known as road tax. The new rates are:
£10 for the first year
£195 annually thereafter
For EVs costing over £40,000, an additional surcharge of £425 per year applies for the first five years, making the total annual road tax £620.
While this is a new cost for EV owners, it remains competitive compared to traditional petrol and diesel vehicles.
Benefit-in-Kind Tax for Electric Company Cars
The Benefit-in-Kind (BiK) tax for electric company cars will gradually rise over the next few years, but will remain far lower than for conventional vehicles. The rates are set as follows:
3% in 2025/26
4% in 2026/27
5% in 2027/28
7% in 2028/29
9% in 2029/30
For comparison, petrol and diesel cars can attract BiK rates as high as 37%. This ongoing incentive encourages businesses and employees to switch to electric fleets.
Boosting Charging Infrastructure
Recognising that access to charging is a key factor in EV adoption, the government is investing over £200 million to expand public charging points, especially in urban areas and locations where home charging isn’t feasible. This includes grants and support for local councils to install more charge points, making it easier than ever to charge your EV on the go.
Support for Businesses: Workplace Charging Scheme
Businesses are also benefiting from incentives. The Workplace Charging Scheme offers up to 75% off the cost of installing EV chargepoints, capped at £350 per socket and with a maximum of 40 sockets per application. This scheme has been extended until March 31, 2026, making it a great time for companies to invest in greener fleets and facilities.
What Does This Mean for You?
Whether you’re a driver thinking about your next car, a fleet manager planning your company’s transition to electric, or a leasing business navigating the market, these incentives make EVs a more attractive option than ever.
Private buyers can enjoy upfront discounts on many models.
Businesses can reduce operational costs with tax benefits and charging subsidies.
The expanding infrastructure eases range anxiety and supports everyday use.
Need Help Navigating the EV Market?
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