Updated: July 2025
This guide explains the current Vehicle Excise Duty (VED), also known as road tax, for personal lease customers. It applies to all vehicle types—petrol, diesel, hybrid, and electric vehicles—registered on or after 1 April 2017, including recent changes introduced by the UK Government in April 2025.
Whether you're leasing a traditional combustion engine or a zero-emission electric vehicle, this guide will help you understand exactly how much road tax you'll need to pay and what’s changed.
In the 2025 Spring Budget, the UK Government confirmed the full integration of electric vehicles into the standard road tax system. This marks the end of tax exemptions for EVs and introduces higher rates across multiple CO₂ emission bands. These updates apply to all new cars registered from 1 April 2025 and also affect cars registered between 1 April 2017 and 31 March 2025 in terms of standard and luxury supplement rates.
The first year of road tax—often referred to as the showroom tax—is based on a vehicle’s official CO₂ emissions. Below is a summary of 2025 first-year rates:
| CO₂ Emissions (g/km) | First-Year Rate |
|---|---|
| 0 | £10 |
| 1–50 | £110 |
| 51–75 | £125 |
| 76–90 | £270 |
| 91–100 | £300 |
| 101–110 | £330 |
| 111–130 | £390 |
| 131–150 | £645 |
| 151–170 | £1,040 |
| 171–190 | £1,565 |
| 191–225 | £2,220 |
| 226–255 | £2,605 |
| Over 255 | £2,745–£5,490* |
*Depending on emissions, higher charges apply to the most polluting vehicles.
From the second year onwards, the annual road tax for all cars registered after 1 April 2017 is:
£195 per year
This flat rate applies to all petrol, diesel, hybrid, and electric vehicles. Prior to April 2025, electric vehicles were exempt; however, they are now fully integrated into the VED system.
If your vehicle had a list price of £40,000 or more when new, an additional £425 per year is payable on top of the standard rate. This supplement applies for five years, beginning in the second year after registration.
Example:
List price: £42,000
Years 2–6: £195 standard rate + £425 supplement = £620 per year
Year 7 onwards: £195 per year
This rule applies to all vehicle types, including electric and hybrid models.
If your car was registered before 1 April 2017, these changes do not affect you. You will continue to pay road tax based on the older CO₂ emissions-based bands applicable at the time of registration.
| Registration Date | First-Year Rate | Standard Rate | Luxury Supplement (£40k+) |
|---|---|---|---|
| On or after 1 April 2025 | Based on CO₂ (see above) | £195/year | £425/year (years 2–6) |
| 1 Apr 2017 – 31 Mar 2025 | Based on CO₂ (historic) | £195/year | £425/year (if applicable) |
| Before 1 April 2017 | CO₂-based banding | Varies by band | Not applicable |
If you're leasing a petrol, diesel, hybrid or electric vehicle, the road tax is included in your lease package, but it still affects the overall lease cost.
The standard annual rate of £195 now applies to all fuel types, including EVs.
If the vehicle you're leasing has a list price over £40,000, it will include the additional £425/year supplement (for 5 years).
For electric vehicle customers: EVs are no longer road-tax free. They are now subject to the same rates as other fuel types.
If you’re not sure how much road tax applies to your chosen vehicle, contact our team or request a quote. We’ll provide a full breakdown including monthly lease costs, VED, and delivery timelines.