What is road tax and how is it calculated?

Road tax, also known as vehicle excise duty (VED), is a tax that must be paid annually by anyone who wishes to drive or keep a vehicle on public roads in the UK.

The amount of road tax you'll have to pay is determined by factors such as the list price of the vehicle you own, its age, and its CO2 tailpipe emissions.

The money collected from road tax goes towards the maintenance and improvement of the UK's road network.

Do electric cars pay road tax?

Right now, all fully electric vehicles are exempt from paying road tax as they don’t produce any tailpipe emissions, but this is set to change in 2025.

From 1 April 2025, registered keepers of electric, zero or low emission cars, vans and motorcycles will need to pay road tax in the same way as registered keepers of petrol and diesel vehicles. It applies to both new and existing vehicles.

How much does road tax on an electric vehicle cost?

Currently road tax on an electric vehicle doesn’t cost anything. But as of 1 April 2025, the following costs will come into play:

• Zero emission cars registered between 1 April 2017 and 31 March 2025 will pay the standard rate of road tax, which is currently £190 a year.
  
  
• New zero-emission cars registered on or after 1 April will pay the lowest first-year rate of road tax, which is currently £10 a year. After the first year, these vehicles will move to the standard rate.
  
  

Other changes include:

• The Expensive Car Supplement exemption for electric vehicles is set to end on 1 April 2025. This means that electric cars with a list price over £40,000 will now need to pay an extra £410 a year. Drivers with an EV over this price range will now pay £600 a year for road tax.
  
  
• Zero and low emission cars first registered between 1 March 2001 and 30 March 2017 that are currently in Band A will move to Band B, which is £20 a year.

Road tax for hybrid vehicles and AFVs

As of 1 April 2025, the £10 annual discount for hybrid vehicles and alternatively fuelled vehicles (AFVs) will go. The rate of road tax you pay will depend on when you first registered the car:

• For vehicles registered before 1 April 2017, it depends on the CO2 emissions. You can check what you’ll need to pay on the government website.
  
  
• For vehicles registered on or after 1 April 2017, you’ll now pay the standard rate of £190.
  
  
  

Electric vans

Zero-emission electric vans will now move to the same rate as petrol and diesel light goods vehicles. This is currently £335 a year.

Electric motorcycles

Zero-emission motorcycles and tricycles will move to the rate for the smallest engine size motorcycles from 1 April 2025. This is currently £25 a year.

Premium rate

Cars that cost over £40,000 must pay a premium rate of road tax in the UK. Right now, electric cars are exempt from paying this, but it’s set to change in 2025. New electric and zero-emission cars registered on or after 1 April 2025 that cost more than £40,000 will have to pay the standard rate of road tax and the expensive car supplement. This brings their road tax costs up to £600.

What is fuel duty?

Fuel duty in the UK is a tax paid on the purchase of fuel, including petrol and diesel, one of the reasons we have fuel duty is to reduce consumption.

Fully electric vehicles don’t have to pay fuel duty as they don’t run on petrol or diesel.

Annual costs for electric vehicles

As well as your road tax from 1 April 2025, you also need to consider the following annual costs for your electric vehicle: - Car insurance: Just like petrol and diesel cars, you need to insure your electric car to drive on the roads in the UK, and it’s illegal if you drive without insurance. The cost of insuring your electric car depends on a range of factors like the car you choose, your age, where you live, your driving history, and where you park your car.

• Electricity costs: At-home charging will of course impact your electricity usage. How much you pay depends on the efficiency of your car, how often you drive it and need to fill up, and the electricity rates where you are.
  
  
• Maintenance: As they have fewer moving parts, EVs tend to require less maintenance compared to diesel or petrol cars. But you still need some maintenance like fluid top-ups, brake pad replacements and more. Often it depends on the make and model you choose.
  
  
• MOT: Just like petrol and diesel cars, you need to make sure your EV has an MOT each year. If it’s a new car, you don’t need an MOT for the first three years.