Electric car road tax: Everything you need to know

If you're in the market for a new car, you'll likely have taken at least a passing glance at electric or hybrid vehicles.

Cheaper to run and better for the planet than petrol and diesel cars, driving an electric vehicle may also save you some money on tax.

In this guide, we explore everything you need to know about electric car road tax and the associated benefits of owning an electric vehicle (EV).

What is car road tax?

Road tax, or vehicle excise duty (VED), is an annual charge that road users must pay on their vehicles. The funds created by this tax are intended to be spent on maintaining and improving road infrastructure in the UK.

The amount of road tax charged to each vehicle is calculated on emissions - the higher the emissions, the higher the charges. However, this will change in 2025 as zero-emission vehicles and electric cars will have to pay road tax for the first time.

Do EVs need to be road-taxed?

Technically, yes, but practically, no. Let us explain.

All vehicles, regardless of the type of fuel they use (petrol, diesel, LPG or electricity), need to be taxed in order to be road-legal in the UK. If you own a car but don’t want to or can’t drive it for whatever reason, you’ll need to get a Statutory Off Road Notification (SORN) for it.

Now, onto the practical side of things. Currently, if you own an electric car, you don’t need to pay to tax your vehicle. This is because the government wants to encourage people to switch from a petrol or diesel car to a greener alternative by using tax exemptions as an incentive.

This is all set to change in April 2025, though, when EV owners will start paying to tax their vehicles, just like everyone else. As well as this change, the rules are set to shift relating to the Expensive Car Supplement (the higher tax rate that applies to vehicles worth more than £40,000 for the first 5 years following their registration).

How is electric car road tax calculated?

Since 2001, road tax has been calculated using vehicle exhaust emissions. As EVs are zero-emission cars, they incur no road tax.

You can check tax rates for new unregistered cars and review current vehicle tax rates on the GOV.UK website.

How much is road tax on electric cars?

If you own a pure electric vehicle, you will pay no road tax. If you own a hybrid car, you must pay road tax, but the amount depends on the car's exhaust emissions.

How much is road tax on plug-in hybrid cars?

As we have established, the road tax rate is calculated using the tailpipe emissions produced by a vehicle.

The specific amount of tax your vehicle will incur depends on when it was registered and the fuel type. So, if you bought your hybrid vehicle before April 2017, you may be charged different rates to a car bought after 2017.

How much is the company car tax for electric cars?

Company vehicle tax is sometimes called a Benefit in Kind Tax, or BIK. This is a tax on the 'benefit' an employee receives through using the company car for personal use. When a vehicle is provided for an employee of a company, the employee must pay some tax on this benefit. 

When you receive a company car, your employer will fill out a P11D form to inform HMRC about the benefits you're receiving, and you'll be charged tax on this.

The current rate for electric vehicles is 2%, but this will end in April 2025. In November 2022, the Government announced plans to increase the tax on EV company cars to:

• For the 2025/26 tax year - 3%
• For the 2026/27 tax year - 4%
• For the 2027/28 tax year - 5%

For context, the BIK charge on an efficient petrol or diesel car that emits around 100g/km of CO2 may be taxed at 25% in 2027/28.

If you're collecting costs and weighing up the pros and cons of an EV, make sure you read our complete guide to electric car insurance.

What are the benefits of getting an electric car?

1. You'll save money

Electric vehicles have become so popular because they're cheaper to run and fill up than their petrol and diesel counterparts. As explored in this guide, you'll also save money on tax, mainly if you use an EV as a company car.

2. They're eco-friendly

Electric cars don't emit exhaust fumes, so you can reduce your carbon footprint and do your bit to combat climate change by making the air cleaner.

3. A better driving experience

Electric cars are renowned for being quieter and a smoother journey compared to petrol and diesel cars. Additionally, EVs typically come with a wealth of tech that can seamlessly integrate with your smart devices, even allowing you to warm the car before you get in.

4. Join the growing number of EV drivers

As of October 2023, there are around 920,000 fully electric cars on UK roads, and the number of electric vehicle owners is predicted to rise in the coming years. 

Increase your savings with a home EV charger

While charging your car at a public point will be cheaper than filling an equivalent vehicle with fuel, it may not be the most cost-effective solution. According to PodPoint, rapid chargers at public points cost an average of £19 for 30 minutes of charging. 

By contrast, if you have a home EV charger installed, you will be paying your current electricity rate, which is currently capped at 28.6p per kilowatt hour in the UK (January - March 2024 price cap). That's over 60% cheaper than the average public charging point.

From April 1 2024, the energy price cap will be reduced to 24.5p per kWh, further improving the cost-effectiveness of charging your EV at home. 

Read our 'How much does it cost to charge an electric car?' guide for more information. Alternatively, take a look at our full selection of electric car guides, including advice on whether you should charge your EV every night and more.