Electric cars are becoming more and more popular due to their many benefits, such as smart EV chargers, Vehicle to Grid charging, and OZEV approved installers by reputable EV charging companies. All of these benefits of electric cars are perfect for people who are looking for ways to save money on fuel and to help the environment. But one question that often comes up is, how does the road tax work on electric cars?
The short answer is that, as of right now, there is no road tax on electric cars in the United Kingdom. This is because the government wants to encourage people to switch to electric cars, in order to help reduce emissions.
Do I have to pay road tax (vehicle tax) for my electric car?
It is dependent on whether you have a pure electric car or a hybrid car. If you have a pure electric car, you do not have to pay road tax. However, if you have a hybrid car, you will have to pay a reduced amount of road tax.
Pure electric cars
The electric car is not subject to the vehicle tax, which means it is free of charge. This is a great incentive for people to switch to electric cars, as it will save them money in the long run.
Additionally, electric cars do not produce any emissions, so they are good for the environment. Electric cars are exempt from road tax and their drivers do not have to pay fuel duty either.
Hybrid cars
If you have a hybrid car, you will have to pay a reduced amount of road tax. The amount you have to pay will depend on the levels of CO2 emissions your car produces. You can pay anything between £0 – £135 per year, depending on the level of emissions.
The government has introduced a new system of road tax, which is based on the emissions of your car. This means that you will have to pay more if you have a car that emits more COII. However, electric cars do not produce any emissions, so you will not have to pay any road tax at all.
So, if you’re thinking of buying an electric car, you can rest assured that you will not have to pay any road tax. And, in the future, you may even be able to save money on your road tax, as the government plans to phase out this tax altogether.
How Is Road Tax Calculated?
Vehicle Excise Duty, commonly known as vehicle tax (VED) is based on the CO2 tailpipe emissions of your vehicle, its list price, and when it was registered. The amount of Vehicle Excise Duty VED you pay is different depending on the type of vehicle and its emissions.
Cars registered after March 2001 are taxed based on their CO2 emissions. The more emissions a car produces, the higher the tax rate will be. All zero emissions vehicles are not subject to road tax.
Cars registered before March 2001 are taxed based on engine size. The more powerful the engine, the higher the tax rate will be. This is why you see many old cars with large engines being driven around, as their owners have to pay more in road tax.
There is an extra fee of 5 percent on all vehicles (except BEVs) with a price tag of £40,000 or above for the first five years of ownership. This is to help fund the government’s investment in electric vehicles.
Will I have to pay car tax on electric cars after 2040?
There has been no clear indication from the government as to whether or not electric car owners will have to pay road tax after 2040. However, given the current trajectory of electric vehicle ownership and the government’s pledge to end the sale of new petrol and diesel cars by that year, it seems likely that electric car drivers will have to pay some form of company car tax in the future.
At the moment, electric cars are exempt from road tax, as they produce zero emissions. This is because the government wants to incentivize people to buy electric cars and reduce harmful emissions from the transport sector.
However, as electric cars become more popular and account for a larger share of the market, it is likely that the government will introduce some form of car tax for these vehicles. This will help to offset the lost revenue from not charging road tax on electric cars.
How to Reduce Road Tax on a Car
There are a few ways that you can reduce the amount of road tax that you have to pay on your car. The most effective way is to buy a car that has low emissions. This will entitle you to the lowest tax rate.
You can also buy a car that was registered before March 2001. This will allow you to avoid paying tax based on emissions, and will instead be taxed based on engine size. The downside is that you will have to pay a higher tax rate than if you bought a newer car.
Another way to reduce your road tax bill is to buy a car that costs less than £40,000. Cars that cost more than this are subject to an extra 5 percent fee for the first five years of ownership.
Finally, you can offset the cost of road tax by installing a low emissions engine in your car. This will allow you to pay the lower tax rate, regardless of the car’s age or emissions.
Bottom Line
Electric vehicles are not taxed on the road since they produce zero emissions. This is due to the fact that the government is attempting to encourage people to buy electric vehicles and reduce harmful emissions from the transportation sector.
However, as electric cars become increasingly popular and account for a growing share of the market, it’s reasonable to anticipate that the government will introduce new motoring taxes for electric cars to avoid slipping towards “zero revenue” by 2040. This would help to offset the cost of maintaining the grid infrastructure needed to charge these cars. In the meantime, electric vehicle owners can enjoy the benefits of not paying road tax payments.
If you need more information on car tax, please visit Vehicle tax rates.
