Electric car tax rates and VED bands explained
Last updated August 4th, 2023
Most UK motorists must pay car tax (VED), although some qualify for car tax exemption, (including many car classic owners).
If you are liable to pay car tax, the amount you’ll pay each year depends on which car tax band your vehicle falls under. This is a confusing topic for many motorists, particularly electric car owners.
In this guide, we will clarify how VED is currently applied to the various types of electric cars, which electric cars are tax exempt – and how the criteria are set to change over the coming years.
If you are unsure whether your vehicle is taxed, enter its registration into our free car tax check tool now. It’s worth checking for your peace of mind, as if you are caught driving without tax, you could receive a fine of up to £1,000!
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How much does it cost to tax an electric vehicle?
As fully electric cars do not produce CO2 emissions, they are exempt from road tax. (Many hybrid cars fall under lower car tax bands, as their CO2 emissions levels are typically lower than dedicated combustion engine vehicles.)
If you purchase a new car that was registered from 1st April 2017, you will have to pay a ‘showroom tax’ to cover the first 12 months.
The amount payable will depend on which VED band your vehicle falls under. For fully electric models, no tax will be applied. However, for all other models, the amount of car tax paid in the first year will depend on the vehicle’s emissions levels.
After that, you’ll pay the standard tax rate every year. The standard rate is currently £180 for hybrid, petrol, diesel and alternative fuel vehicles (such as LPG cars) - and £0 for fully electric vehicles. (However, tax-exempt vehicles must still be registered as taxed with the DVLA.)
Electric car VED rates (1st April 2017 onwards)
For EVs registered from 1st April 2017:
CO2 emissions (g/km) |
First-year rate (£) |
Standard rate (£) |
|---|---|---|
0 g/km |
£0 |
£0 |
Electric car VED rates (between 2001 – 2017)
For EVs registered between 1st March 2001 and 31st March 2017:
CO2 emissions (g/km) |
VED band |
Standard rate (£) |
|---|---|---|
Equal to or less than 100 g/km |
A |
£0 |
What about road tax on electric cars registered before 2001?
Electric vehicles produced before 2001 are extremely rare. However, many older petrol and diesel vehicles have undergone electric car conversion, meaning there are some pre-2001 vehicles with an electric powertrain on the roads today.
According to the current VED rules, converted EVs can benefit from zero car tax until April 2025.
Will the UK Government introduce car tax for electric vehicles?
According to EV market insights, as more and more drivers are buying electric cars in 2023, the Government is expected to introduce car tax for most electric cars from 1st April 2025.
The impending 2030 petrol and diesel ban will prohibit the sale of all new petrol and diesel cars in the UK. This is expected to cause a sharp rise in the use of electric vehicles. From 2025, the UK Government will begin to tax electric vehicles to help make up the shortfall in car tax revenue.
What about other electric car types?
There are various types of electric cars on the market. However, it is only fully electric models that are currently exempt from VED.
Owners of hybrid petrol, diesel and alternative fuel vehicles are all liable to pay car tax. Please refer to our guide ‘UK car tax bands explained’ for more information.
EVs and benefit in kind (BIK) tax explained
Benefit in kind (BIK) is a tax paid by employees who have a company car for private use. All company cars (including electric cars) fall under a BIK tax banding, which determines how much tax the employee is liable to pay.
These bands are calculated based on CO2 emissions and P11D value, which is the vehicle’s list price, including extras and VAT. Despite their low CO2 emissions, electric vehicle owners must still contribute toward BIK tax.
On April 1st 2023, the amount of BIK tax applied to electric company cars increased from 1% to 2%. This new rate is currently frozen until 2025.
How do I calculate my BIK contribution?
You can calculate your annual BIK contribution by multiplying your vehicle’s P11D value by its BIK percentage banding, then multiplying this figure by your tax band percentage.
