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Road Tax on Electric Cars – The Complete Guide

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Categories: EVs Explained

One of the first things you might want to ask when making the switch from a fuel car to an electric car, is how much road tax do I need to pay on my EV?

This is an important question, as you don’t want to be taken by surprise later on. 

Luckily, there are all kinds of incentives for electric vehicles at the moment, with road tax being one of them.

In this article, we will provide you with everything that you need to know about paying road tax on electric cars in the UK.

What is the Vehicle Excise Duty?

The VED (Vehicle Excise Duty) is just another name for Road Tax – applying to the tax of
all road legal vehicles, and is managed by the DVLA.

Do I have to pay Road Tax on my EV in the UK?

The Vehicle Excise Duty for electric cars is calculated by your vehicle’s CO2 tailpipe emissions, year of registration, and price. Essentially the less emissions that your car produces, better the impact on the environment, and your wallet. 

All full BEV’s (Battery Electric Vehicles) produce zero-emissions, and therefore qualify for the zero-rated standard tax incentive. 

The good news is that in order to encourage a switch to zero-emission vehicles, the UK government has introduced a new piece of legislation. This allows all drivers of electric cars in the UK with zero-emissions, to be exempt from paying any road tax for the first year, and all successive years thereafter.

This means that if you own a zero-emissions vehicle, you will pay zero road tax!

You can find out more about this incentive here.

Is Road Tax free on plug-in hybrid electric vehicles?

If you are interested in buying a plug-in hybrid electric vehicle (PHEV), these differ from full battery electric vehicles in terms of tax. Hybrid vehicles are road taxed according to their CO2 emissions, and there are a number of different tax bands. 

Road Tax is reduced on hybrid vehicles, as there are not many hybrid models emitting more than 100g/km of carbon emissions. Any hybrid vehicles producing more than this, will be taxed at a higher rate due to producing more pollution. 

You can find all of the information you need to know on Road Tax charges – based on your vehicle’s emissions, on the UK government website.

Will I need to pay VED after 2025?

After the initial Road Tax free period, it is unlikely that this incentive will continue further into the future.

As more people buy electric cars, it is likely that there will be no need to provide further incentives. The government will review their plan, when their EV uptake target has been reached. Although more information will be made available on this subject in due course.

If you’re considering the switch today, now is the best time to take full advantage all of the incentives.

Do I still need to tax my car if Road Tax is free?

Yes, even if you own an electric vehicle that entitles you to free Road Tax, you are still legally obliged to register your car for tax with the DVLA. If you do not register your car for tax, you could risk getting a fine.

Are company cars eligible for free Road Tax?

As part of the Climate Change Act 2008, the goverment plans to reduce carbon emissions drastically by 2050. As a part of this plan, a benefit in kind (BIK) incentive has been introduced covering company fleets. This allows company vehicles to be eligible for free Road Tax on zero-emission vehicles for the first year.

The BIK tax incentive will increase in percentage over the next few years. You can find more information about BIK and Road Tax on electric cars on EDF Energy’s website.

This is fantastic news for businesses, as they make the switch to electric vehicles, and help to play their part in reducing carbon emissions. 

You can find out more about the government’s plans to target carbon emissions here.

Road Tax on Electric Cars - Conclusion

At the end of the day EV’s don’t come cheap, compared to regular fuelled vehicles. 

All of the government incentives do add up, so maybe now is the right time to switch to take full advantage of the savings on offer.