Can You Afford to Go Fully Electric? Financing EVs in 2025

Thinking of getting an electric car? With the ban on new petrol and diesel cars creeping closer, you won’t be the only one. EVs are becoming ever more popular, but with a higher upfront cost, it’s worth knowing ways to help make them more affordable.

From 2025, there are some big changes to be aware of, including new road tax charges for electric cars. But, there is still some help from government grants, other incentives and finance options that could help if you’re thinking about making the switch. We’ve covered everything you need to know.

What’s new for EVs in 2025?

With lower fuel and maintenance costs, there could be big financial benefits to owning an EV over time. However, some of the current perks enjoyed by EV owners are unfortunately coming to an end this year.

One of the biggest benefits for EV owners was the fact that full EVs were exempt from road tax. But, there’s been a major change on this front. From April 1st 2025, EV owners will have to start paying the same yearly Vehicle Excise Duty (VED) – aka road tax – as petrol or diesel car owners, which is £195. 

Plus, EVs are now no longer exempt from the ‘expensive car supplement’. This means that if your car costs more than £40,000, you’ll have to pay extra tax of £425 per year for five years.

But, there are still financial incentives in place that could help make the case for an EV if you’re considering buying one this year, which we’ve outlined below.

Note: Tax rates can change, so check official sources for the most up-to-date info.

Government grants for EV chargers

If you own an electric car, it’s recommended you install a charging point at home. This is one of the costs associated with an EV that’s important to factor in if you’re thinking of buying one. Installing a home EV charging point will set you back, on average, between £800 and £1,200.

But, if you own a flat or are renting a property, there’s good news. The UK government currently offers a grant to help foot some of this cost. This is called the EV chargepoint grant and gives either £350 or 75% off the cost of buying and installing a home charger (whichever is cheaper).

Those eligible are:

• Renters
• Flat owners
• Landlords

The idea behind the electric vehicle chargepoint grant for renters or flat owners is to break down some barriers that might stop people getting an EV. These are available to renters and flat owners with off-street parking. If you own a house rather than a flat, you’ll usually need to cover the full cost of installing a home charger yourself.

If you’re renting and can’t fit a charging point without your landlord's permission, it’s worth letting them know about the electric vehicle chargepoint grant for landlords, which gives the same financial help.

Other electric car incentives in the UK

Benefit-in-Kind (BiK) tax for company cars

Since electric cars produce zero emissions, they qualify for the lowest BiK rate. This is the personal tax you pay for having a company car. The BiK rate for EVs is currently 2%, which is far lower compared to non-Evs at 30%! It’s worth bearing in mind that this will increase gradually to 9% by 2029, but EVs will still be taxed at a much lower rate than petrol and diesel cars.

ULEZ and London Congestion Charge exemptions

Another financial perk of EVs is that they’re currently exempt from daily Ultra Low Emission Zone (ULEZ) and Low Emission Zone (LEZ) fees in London and other Clean Air Zones in cities like Birmingham, Bristol and Sheffield. This can be a big benefit over time if you live or work in these cities.

They’re also currently exempt from the daily £15 London Congestion Charge, which can really help you save money over time if you’re regularly in London. To get this, drivers have to register for the Cleaner Vehicle Discount (CVD). But, it’s worth noting that unfortunately the CVD discount will end on the 25th December 2025. From this point, EV owners will also have to pay the London congestion charge.

Are there any other financial considerations for EVs?

As well as these perks, there are other cost pros and cons of EVs you might want to factor into your decision.

Lower running costs

Perhaps the biggest benefit of EVs is the money you save on fuel. Though your energy bill will increase if you charge from home, you’ll no longer have to fill up with petrol or diesel. The cost of charging an EV is still significantly cheaper than fuel, and could save you significant amounts over time.

Lower maintenance costs

EVs typically have lower maintenance costs than internal combustion engine (ICE) vehicles, simply because they have fewer moving parts and don’t need services like oil changes for example. This means you’ll save money long term on costly maintenance and repairs.

Higher up-front cost

But, one of the biggest roadblocks for some people when it comes to going electric is the up-front cost. EVs usually cost more upfront than petrol or diesel cars. This is mainly because of the cost of the battery and the advanced technology used in EVs. But, significantly lower running and maintenance costs can help offset the higher upfront price over time.

Financing options for EVs

If you’re wondering how to afford an electric car, EV car financing could be a great option for you, especially if the upfront payment is out of your budget. Here are some common ways to spread the cost:

Personal Contract Purchase (PCP)

PCP lets you pay for an EV in monthly instalments, with the choice to buy the car at the end or hand it back. Monthly payments are usually lower than other finance options because you’re not paying off the full value of the car.

At the end of the term, you could:

• Pay the final ‘balloon payment’ and keep the car
• Hand the car back with no extra cost (as long as you’ve kept to the mileage limits and terms)
• Part exchange it for a new PCP deal on another car

Hire Purchase (HP)

With HP, you pay off the full value of the car in monthly payments. Once you’ve made the final payment, the car is yours.

HP usually comes with higher monthly payments than PCP, but you won’t have a big final payment at the end. You’re simply paying off a loan to own the car (plus interest). This could be a good option if you plan to keep the car long-term.

Leasing (PCH)

Leasing is essentially renting a car long-term. You pay a monthly fee and hand the car back at the end of the agreement. You typically have lower monthly payments, but will never own the car, so miss out on building that equity.

The best car finance option for you depends on what your finances and what priorities are for car ownership, particularly whether or not you want to own the car at the end of your agreement.

The takeaway

Unfortunately, some UK EV incentives have ended or are being phased out this year. The biggest change is that EVs will no longer be exempt from road tax. Plus, folks living in or visiting London will have to pay the London Congestion Charge from the end of this year. 

But, the good news is, there are still major financial perks to owning an EV. The Government grants for EV chargers and other electric car incentives can make a big difference to their affordability. If you’re thinking of getting an EV, be sure to weigh up all the financial considerations before making your decision.

Disclaimer: The information provided here is intended as a general guide. For specific financial advice regarding EVs and car finance options, we recommend speaking to a qualified financial advisor.