Electric car road tax: what you need to know

As drivers will know full well, you legally need to have road tax, or Vehicle Excise Duty (VED) for your vehicle in order to be allowed to drive it. Electric car road tax works a little differently compared to a standard petrol or diesel powered vehicle, and there could be a number of tax-related benefits if you own an electric vehicle.  

Do you pay road tax on electric cars? In this guide, we’ll go through everything you need to know about electric car road tax and the benefits you get for being an electric car owner. 

Road tax stats

Electric vehicles are very different from your standard vehicle. If you have a low emission electric vehicle, you’ll be paying little to no road tax; this is because these vehicles are the cleanest types around. It’s worth noting that:

• You will be exempt from Vehicle Excise Duty if you have a pure battery electric vehicle.
• You will pay a reduced Vehicle Excise Duty if you have a plug-in hybrid vehicle.
• If your vehicle is worth over £40,000, you’ll need to pay an additional premium rate for the first five years of ownership for your electric vehicle.

How is electric car road tax calculated?

Vehicle tax within the UK is based on a car‘s carbon dioxide emissions. Put simply, the more CO2 your vehicle produces, the more tax you will have to pay. From April 2017, harsher tax rates were put into place, meaning that you’d be paying more if you had a higher-polluting vehicle. However, the new changes favour those cars with lower emissions, meaning they pay less for their tax. This has been a big incentive for people to make the switch from a standard vehicle to an electric.

How much is road tax for electric cars?

Depending on the type of electric vehicle you own, there will be a difference in the amount of road tax you will need to pay:

Battery electric vehicles. 

As of April 2017, zero emission vehicles have a zero-rated standard tax. This means that if you’re an owner of one of these vehicles, you don’t have to pay any Vehicle Excise Duty as long as it isn’t eligible for a premium rate. A premium rate applies to those vehicles worth over £40,000. If your vehicle is over this amount, then the premium rate will have to be paid for the first 5 years of ownership.

Plug-in hybrid electric vehicles.

If you have a plug-in hybrid electric vehicle, then you’ll more than likely have to pay from £10 to £100 for the first year of ownership, and around £140 per year after that. However, this does depend on your CO2 emission levels. 

Company car tax on electric cars.

Company car tax is sometimes known as a Benefit in Kind Tax, or BiK. It’s a tax on the ‘benefit’ an employee receives through using the company car for personal use. When a car is provided for an employee of a company, then that employee must pay some tax on this benefit. 

The amount of tax payable by an employee is partly based on a car’s P11D value. The P11D value is calculated using the following:

• The list price of a vehicle
• Delivery fees
• VAT
• Any optional extras

As an employee of a company will pay BiK tax on their vehicle, an employer must also pay employer’s national insurance on this value. Currently, this is set at just over 13%, but this can fluctuate.

Electric car tax benefits.

If you’re a business offering company cars for your employees, you could probably benefit more from turning your standard company car into an electric vehicle. Up until 2021, companies can receive a tax benefit of 100% for the first year, as long as the electric cars emit 50g/km of CO2 or less.

You should really make the most of using ultra low emission vehicles. Here’s what you can expect:

Save money-

Car owners or those with company cars from their place of work, can save thousands of pounds when switching to low emission, plug-in vehicles. From reduced electric car road tax and no need to fill up on fuel, the savings really do add up. 

Incentives-

With reduced Vehicle Excise Duty and Benefit in Kind tax for employers, there are many incentives when owning and switching to an electric vehicle, not only for an individual, but for a business owner looking to invest in company vehicles. With added reasons to make that switch, there are even more opportunities for helping the environment and saving money.

It’s the future-

By encouraging more people to make the switch, we’ll be better prepared for future technologies. Over time, it’s likely that more and more vehicles will be electricity powered, so switching now will help with the process. Changes to company car tax rules will also strengthen future decisions from business owners when choosing a new company car. 

Save with Electric Road Tax 

By now, you’ll hopefully be a little more educated on electric car road tax,  including how it works and the benefits you can take advantage of when switching to an electric vehicle. Electric vehicle tax can be significantly reduced as your vehicle will be much more environmentally friendly, giving off less CO2 emissions than a standard car, and helping to keep the air cleaner.

With an electric vehicle comes the need to charge it; instead of making your way to your local garage to fill up your tank with fuel, simply plug in your electric vehicle to your electric vehicle charger. If you’re in need of the perfect charger to fit your vehicle, or you’re just looking for a replacement, get in touch with BOXT. You can reach a member of our team through our live chat, or you can search for your perfect match using our ‘Find An EVC’ tool.