Dick Lovett

Road tax on electric cars

Posted 7th October 2022

BMW Electric Group

Electric Group

Driving an electric car comes with many advantages. On the road, electric cars are smooth to drive, with instant acceleration delivered from the motor, no need to manually crunch through the gears, and that lovely, almost peaceful hum as you cruise along. There’s also the satisfaction of knowing that you’re doing your bit to protect the environment, and in driving an electric car you’ve already made the important transition way ahead of 2030 – the deadline that will see sales of new petrol and diesel cars banned.

It’s probable that you’ll save money, too, by driving an electric car. Although surging energy prices are likely to make it more expensive to charge your electric vehicle than previous years, there are still cost savings to be made. One of the most common questions from potential new electric buyers is, ‘do electric cars pay road tax?’ Well, the answer is no, not currently – but that is set to change in the future.

Is there a Road Tax on Electric Cars?

If you drive an electric car, we have good news for you. There are no current requirements to pay road tax (also known as Vehicle Excise Duty (VED), vehicle tax or car tax) on electric cars! With the cost of pretty much everything else rising, it’s a welcome bonus that you can make a saving on road tax.

However, that’s going to change soon. Following the UK Government’s Autumn Statement in November 2022, it was revealed that electric cars will be subject to road tax – just like hybrid, petrol and diesel vehicles – from April 2025. This means owners of all electric cars and vehicles registered from April 2025 will have to pay road tax. Though this will be at the lowest rate for the first year – currently just £10 – from the second year it will be priced at the standard rate of VED. Electric cars registered from 2017 onwards will also need to pay road tax, and will be charged at the standard rate of VED. At the time of writing, this is £165.

Porsche Taycan Charging

There has also been another change as a result of the Autumn Statement. Electric cars have previously been exempt from something called the Expensive Car Supplement, which applies to new cars priced more than £40,000. From April 2025, electric cars won’t be exempt from the scheme. This means that anyone buying a new electric car for £40,000 or more will also have to pay a £355 supplement every year for five years, from the second to the sixth year of registration. This is in addition to £165 in tax from year two onwards.

Currently, electric cars are among a list of vehicles that are tax-exempt, alongside other categories such as disabled passenger vehicles, mobility scooters, powered wheelchairs and lawn mowers – not that we’re suggesting you take yours for a spin around the block – as well as historic vehicles. What’s a historic vehicle? It’s defined as a vehicle that is over 40 years old. So, if you have a car that’s over 40 years old, typically a classic car, you won’t need to pay tax. Bicycles, of course, are also exempt from tax – although they’re used on the road, the official term remains vehicle tax.

However, when we refer to tax on electric cars, the definition is clear, and quite strict. According to gov.uk: ‘the electricity must come from an external source or an electric storage battery not connected to any source of power when the vehicle is moving to be exempt.’ This means that it’s only pure electric cars that are currently tax-free. Plug-in electric hybrid and mild electric hybrid cars will need to pay tax.

Porsche External Charger

For PHEV cars, the cost in the first year of road tax can range from £0 to £105, and after that it’s £145 per year. This still represents a saving against many petrol and diesel vehicles, though, which often see an increase annually.

How is the Road Tax/Vehicle Excise Duty (VED) Calculated?

The way road tax – or Vehicle Excise Duty (VED), to use its official title – is calculated has changed in the last 20-plus years. For all cars registered since March 2001, VED has been calculated based on the CO2 tailpipe emissions of a vehicle. That’s why owners of older vehicles might typically see the cost of their road tax increase every year. For vehicles registered before March 2001, engine size is used to establish the price of road tax.

So, because tailpipe emissions from electric cars are zero, so is the tax on electric cars – until April 2025.

How much will the Vehicle Excise Duty (VED) for an Electric Car Cost?

Until April 2025, there will be no road tax on electric cars. From April 2025, new electric cars will be subject to road tax, initially at the lower VED rate for the first year and then at the standard rate in the subsequent years. Of course, those rates may change by the time 2025 rolls around, and there may even be a change of decision on paying road tax on electric vehicles. But, as of November 2022, that’s where things stand.

BMW i3 All Electric

A word of advice, though. While you don’t currently have to pay any road tax if you own and drive an electric vehicle, you will still need to tax your car, by going through the process of registering it every year. It will just be free to complete the documents online.

Find your perfect electric car with Dick Lovett. View our current range of stock here, including models from BMW,  MINI, Jaguar, Land Rover and Range Rover, and Porsche. Or, check out electric bikes at BMW Motorrad.

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