Currently electric cars are exempt from road tax and because they’re fuelled by electric and not fossil fuels, you won’t be paying fuel tax either.
So, as well as helping you do your bit for the environment, switching to electric can lead to some good savings too. We take a closer look at the tax benefits of electric cars.
You don’t pay road tax on electric cars because they produce zero tailpipe emissions and the government has introduced various incentives to encourage more people to switch to greener modes of transport. This includes zero road tax on zero emissions vehicles.
All vehicles in the UK need to be taxed by law, or it’s illegal to drive them on public roads. So even though electric cars don’t pay road tax, you still have to tax them – which means you can’t ditch the paperwork altogether. They are just ‘free’ to tax.
From 1st April 2025 electric vehicles will need to pay road tax.
Road tax, or vehicle excise duty (VED), is worked out based on:
Hybrid cars still have to pay road tax, but at a lower rate. This is because they still use traditional fuel as well as an electric motor so they still produce CO2 emissions.
Just like with a standard car, you’ll get a yearly reminder from the DVLA. You need to follow the same process as with petrol or diesel cars where you either tax your car online on the gov.uk website, or in a post office.
You pay tax when you first register your car for 12 months, then you pay tax every 6 or 12 months after that at a different rate. Don’t ignore your renewal notice, as you could be fined up to £1,000. You might even enjoy the road tax experience if you don’t have to pay!
A company car is classed as a non-cash benefit that has monetary value so when you are given one to drive, benefit-in-kind (BIK) tax will be taken directly from your monthly salary via PAYE.
So, if your employer offers you an electric car as part of your pay package, you will need to pay company car tax on it, but it will be a lot less than for a petrol or diesel car.
There are some other benefits that will help save you costs when you drive an electric car.
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