Summary
Road tax, officially known as Vehicle Excise Duty (VED), is calculated based on the CO2 tailpipe emissions of your vehicle, its list price and which year it was registered in.
- Pure battery electric vehicles (BEVs) are exempt from VED.
- Plug-in hybrid electric vehicles (PHEVs) pay reduced VED.
- Any vehicle (excluding BEVs) with a list price of £40,000 or above will incur an additional premium rate for 5 years (starting from the second time the vehicle is taxed).
How Road Tax/Vehicle Excise Duty (VED) is calculated
VED is calculated according to the CO2 tailpipe emissions for all vehicles registered since March 2001. For cars registered before March 2001 the tax is calculated based on engine size.
Zero emission vehicles (BEVs) are exempt. Plug-in hybrids (PHEVs) are subject to modest VED and any plug-in hybrids that cost £40,000 or more are subject to pay an annual supplement for 5 years (starting from the second time the vehicle is taxed).
How much will Road Tax/Vehicle Excise Duty (VED) for an electric car cost?
Battery Electric Vehicles (BEVs)
Zero emission EVs (BEVs) are zero-rated standard tax for both the first year and all subsequent years. That means you don’t pay any road tax on a pure electric vehicle.
Plug-in Hybrid Electric Vehicles (PHEVs)
PHEVs are now likely to cost between £0 and £105 for the first year depending on CO2 emissions – and then £145 each year thereafter.
Premium Rate
A premium rate applies to vehicles worth £40,000 or more and will need to be paid in addition to any applicable VED charges for the first 5 years the vehicle is on the road (from the second time the vehicle is taxed). You do not have to pay this rate if you have a zero-emission vehicle (BEV).
Cars registered after 6th April 2021:
| Vehicle CO2 emissions | First year rate (FYR) 2021-22 | Standard rate (SR) 2021-22 | Premium supplement (vehicles with list price >£40k) |
| 0 g/km | £0 | £0 | £0 |
| 1-50 g/km | £0 | £145 | £335 |
| 51-75 g/km | £15 | £145 | £335 |
| 76-90 g/km | £105 | £145 | £335 |
| 91-100 g/km | £130 | £145 | £335 |
| 101-110 g/km | £150 | £145 | £335 |
Tip: You still must tax your car each year, even if it is exempt! This can be done online at www.gov.uk/vehicle-tax or at your local Post Office. Many BEV drivers enjoy going through the VED process, since it is free!
Fuel Duty
The most productive form of motoring taxation for HM Treasury is the duty paid on petrol and diesel. Clearly this is still paid by PHEV drivers on their petrol, but not BEV drivers.
Given how productive fuel duty is, moving the UK to BEVs will cause a significant tax yield reduction. Rather than introducing Fuel Duty on electricity, other measures are likely.
