Road tax for electric cars

Confused about road tax for your electric car? Read on to find out why we must pay tax on cars and whether electric cars pay it.

Summary

  • Currently, electric cars do not need to pay road tax. They are exempt because they produce no tailpipe emissions and to encourage greater uptake in the UK
  • However, from 1st April 2025 that exemption will be removed and all electric cars will have to pay the standard road tax 

What is Road Tax?

Road tax or more recently known as Vehicle Excise Duty (VED) is an annual government taxation payable for any vehicle owner to use it on public roads. It’s a mandatory payment and hefty fines can be incurred if you are found driving a car without it.

Vehicles kept off the road are still required to be taxed, or have a Statutory Off Road Notification (SORN).

Why do we pay Road Tax?

Road tax funds are paid directly into the central government fund which is used to pay for projects across the country – from vital road works and maintenance.

Do you have to pay road tax on electric cars?

Currently, electric cars are exempt from paying road tax. This tax relief on electric cars was introduced to encourage a greater uptake up drivers choosing to go electric since they help to improve local air pollution and the UK’s overall carbon emissions.

Whilst the cost is currently nil, electric cars still need to register for VED. So don’t forget!

When will I have to pay road tax on my electric car?

From 1st April 2025, electric cars will have to pay the standard rate of road tax. This change was announced as part of the Autumn Statement in 2022.

The standard rate is £165 per year, however EV drivers who own an electric car valued at over £40,000 new will also have to pay the premium car tax rate of £355 which bring the total annual cost in road tax to £520.

The new tax on electric cars will be applicable for all electric cars registered from April 1st 2017 – millions of used EVs in the UK will start to have to pay VED.

An MG5 being driven through a park with an elmo air freshener hanging from the rear view mirror

How is vehicle excise duty calculated?

The cost of your annual road tax depends on the car’s official CO2 emissions and the type of fuel it uses. Some cars are exempt such as electric vehicles and some classic cars.

Penalties on the most polluting cars are enforced to encourage ownership of less polluting cars to help reduce air pollution and emissions.

The price of your road tax depends on when your car was registered:

  • Cars older than 40 years are considered classic and are exempt
  • Before March 2001 – taxed based on engine size
  • Between March 2001 – April 2017 – taxed based on the official CO2 emissions of the car
  • On or after 1st April 2017 – just the first-year rate is based on CO2

If you buy a new car now

If you buy a new car now, your VED is based upon the system introduced in April 2017. Your tax for the first 12 months is based upon the emissions of your car, and the following years are simply a flat rate.

To calculate how much road tax you need to pay, head to Gov.uk.

FAQs

Do hybrid vehicles pay road tax?

Yes, hybrid cars will pay road tax just like petrol and diesel cars. Since VED is mostly calculated on a cars emissions, low-emission cars (like hybrid) will pay less.

Why is the EV road tax exemption coming to an end?

Electric cars are growing rapidly in popularity and make up an increasing proportion of the cars on our roads – half of all new vehicles by 2025 is forecasted. To make the system fairer, the chancellor decided to remove the EV road tax exemption.

How do you pay your car tax?

To register, head to the GOV.uk website or apply at your local Post Office. You’ll need a reference number from your vehicle log book. Road tax can be paid yearly one lump sum, or you can pay monthly via a Direct Debit. It’s cheapest to pay in one yearly lump sum, though many drivers prefer the convenience of monthly payments.

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