A guide to tax on electric vehicles
Most people are aware that electric cars come with different costs to petrol cars. But what about road tax for electric cars? Do you get tax relief on electric cars, or do you need to pay all the taxes associated with petrol vehicles?
We explore how tax works when it comes to electric vehicles, so you'll know exactly where you stand.
Leasing an electric vehicle can save you money on not only road tax, but also on:
- Benefit in Kind if you get your car through your employer
- Income Tax and National Insurance - if you get the car through a salary sacrifice scheme via your employer
Want to find out how? Stick around and we’ll tell you.
How is road tax calculated?
In the UK, road tax (or VED, Vehicle Excise Duty) varies according to a vehicle's tailpipe CO₂ emissions. The rate you pay depends on how old your car is, and what year it was registered.
Simply put, the lower the emissions, the less you'll pay in road tax. That said, it's important to keep in mind that road tax also looks at the vehicle's base price and year of registration. So, even if two cars have the same emissions, one might carry a higher road tax bill if it's a newer or more expensive model.
Do electric cars pay road tax?
No, at the moment they don’t. Electric cars don’t emit CO₂ so you don’t pay any road tax when driving an EV. From 2025, electric cars will start contributing to road tax.
Fully electric cars are also completely exempt from the London Congestion Charge and the Ultra Low Emission Zone (ULEZ) charge. With many other cities introducing clean air zones, if you're driving an electric car in the UK, you could save a lot of money on both road tax and congestion charges.
What is a premium car surcharge?
There's currently no road tax at all on electric cars in the UK. Come 2025 there will be a standard rate of road tax to pay, and an added surcharge to vehicles worth £40,000 or more. In the first year the EV will cost £10 to tax, and between years 2 - 6 it'll cost £520 a year for premium car tax. After that, you'll just need to pay the standard rate of around £165 per year.
Do you still have to register an electric vehicle?
Yes. You’ll always need to register your vehicle with the DVLA. If you get your car from Octopus Electric Vehicles we’ll take of this for you.
If not, you can do this at the Post Office or online on the government website.
You'll need your car registration number, and the 15-digit reference number from your vehicle log book (V5C), a new keeper slip, or a recent reminder letter from DVLA (V11). The process is simple and only takes a few minutes - the hardest part is remembering to do it.
Even though you aren’t obligated to pay any road tax, this is a necessary step.
Get your company a green employee benefit of the future
Looking to save money on road tax and get behind the wheel of a brand new electric car with minimal cost and hassle? We're here to help. With our EV salary sacrifice scheme, you can get a brand new electric car with no upfront cost and pay for it through your salary. This means that you'll save money on Income Tax and National Insurance. Find out about all of the benefits of our EV salary sacrifice scheme - from getting a free home charger installed to getting 4,000 free miles' worth of charge.
If you’d rather go for a personal lease, simply browse all electric cars on our website to get started, and if you're unsure which one is right for you, our electric vehicle experts are on hand to help. Get in touch today and we'll be happy to answer any of your questions.