Do Electric Cars Pay Road Tax?

18 Posted: 18th Nov 2022
Do Electric Cars Pay Road Tax?
  • Electric Car Road Tax Guide 2024

    Road tax, or Vehicle Excise Duty (VED) as it’s officially known, is charged on nearly all cars on UK roads. However, if you drive an electric vehicle, you’re currently exempt from paying for it.

    Exemptions for road tax were introduced in April 2020, and fully electric cars enjoy £0 road tax in the first and subsequent years. Hybrid vehicles also pay lower VED depending on emissions. 

    Road tax exemption is just one of the many benefits of driving an EV. For example, electric car drivers don’t have to pay London’s Congestion Charge or Clean Air Zones across the UK. Plus, electric vehicles typically have lower running costs and maintenance charges compared to diesel and petrol cars.

     

  • So, do you pay road tax on electric cars?

    No. If your car is entirely powered by an electric motor and battery, you won’t pay any road tax. 

     

  • How is road tax calculated?

    Vehicle Excise Duty is calculated in several ways:

    Cars registered after April 2017 pay a first-year road tax based on CO2 emissions. Then tax is paid every six or twelve months at a different rate.

    For cars registered between March 2001 and March 2017, road tax is applied based on emissions at the exhaust and fuel type.

    Cars registered pre-March 2001 are calculated based on the vehicle’s engine size.

    The most polluting cars (those with the highest CO2 emissions) pay higher road taxes. In comparison any cars with zero emissions are exempt.

     

  • Why is road tax calculated this way?

    Vehicle Excise Duty rates have changed over the years, and modern vehicles are now charged based on how much CO2 they emit. These changes were introduced to promote the uptake of greener cars and eco-friendly fuel solutions.

    There has been a significant increase in the number of electric vehicles on UK roads, with drivers enjoying exemption from road tax as they don’t produce any emissions. With higher rates for the most polluting diesel and petrol cars, it’s more cost-effective for drivers to make the switch. Plus, it lowers carbon footprint overall.

     

  • Do you have to tax your EV?

    Electric vehicles don’t pay road tax. But, drivers must still register their cars for road tax at £0. The process is the same as taxing a petrol or diesel vehicle. Just head to the government’s site and fill out your details. 

    Unfortunately, if you don’t register for Vehicle Excise Duty or fail to renew your road tax every year, it could result in a fine of up to £1,000 and invalidate your insurance.

     

  • What is first-year road tax?

    When you purchase a new vehicle, drivers must pay tax when it is first registered. This is called first-year tax and covers Vehicle Excise Duty for the first 12 months. 

    The initial payment is based on the vehicle’s CO2 emissions, and the amount you pay differs depending on the level of emissions produced. Again, diesel cars have a higher tax band compared to petrol, hybrid and electric vehicles.

     


  • Hybrid car road tax

    Electric car road tax

    Hybrid cars produce lower emissions than conventional petrol and diesel vehicles. So, road tax is lower as it’s based on how much CO2 is emitted.

     

  • Plug-in hybrid road tax

    With anywhere from 30-40 miles of pure electric power, plug-in hybrids typically produce fewer emissions and pay less tax.  

     

  • Full hybrid road tax

    Full or self-charging hybrids offer pure electric power at slow speeds and short distances. This places them in a lower tax band, as emissions are lower. 

     

  • Mild hybrid road tax

    These vehicles can’t run on electricity alone, so they are taxed similarly to other petrol and diesel models depending on CO2 emissions. Rates are likely to be lower than comparative ICE engines as the MHEV powertrain allows for greater fuel efficiency.

     


  • Other exemptions

    Do Electric Cars Pay Road Tax?

    Alongside road tax exemptions, electric vehicle drivers benefit from other exemptions such as:

     

  • Congestion Charge

    Battery-powered vehicles are exempt from paying charges to enter London’s congestion charge zone. 

     

  • ULEZ & LEZ

    Electric drivers entering Ultra-Low and Low Emission Zones don’t have to pay to enter.

     

  • Clean Air Zones

    Many cities are introducing Clean Air Zones, which charge the most polluting vehicles to enter. So, as electric cars have zero emissions, they are exempt from paying a daily fee. 

     

  • Future plans for EV road tax

    Currently, there’s no tax on electric cars. However, a recent announcement in the Autumn 2022 budget is bringing changes to rates for electric vehicles. 

    From April 2025, electric vehicles registered after April 2017 will pay a standard electric car road tax rate of £160 per year. However, EVs registered before 2017 only pay £20 per year. 

    The first-year rate still applies for EVs registered after 2025 and is said to be £10. Then subsequent years change to the standard VED rate.

    In addition, from 2025, EVs fall into the ‘premium’ tax band if the list price exceeds £40,000. Currently, electric cars are exempt from this extra tax charge, which is an additional £355 a year for five years (charged after the first-year rate).

    While this is a significant change for EV drivers, the government has said it will keep company car tax rates low for EVs. Slight rate increases are planned, but a cap of 1% per year for three years is expected after 2025.

     

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