Guide to Road Tax for Hybrid & Electric Cars 2022

11 Posted: 11th Apr 2022
Guide to Road Tax for Hybrid & Electric Cars 2022
  • Are electric and hybrid cars exempt from road tax?

    Every car needs to be taxed. But not every car needs to pay road tax. The official name of road tax is Vehicle Excise Duty, and it’s mostly calculated on the amount of CO2 your vehicle emits. That means that low-emission cars pay less. It’s that simple.

    Explore below to learn about which cars are exempt, how it works and more. Or contact your local Pentagon Group dealership for a chat with our hybrid and electric specialists.

    Get in touch

  • Do electric cars pay road tax?

    No. Currently, fully electric cars don’t pay any road tax. Road tax is calculated on CO2 emissions. As EVs don’t produce tailpipe emissions, they don’t have to pay road tax.

    But you still do need to get your car taxed to drive it legally, so don’t forget.

    Most cars have to pay the first year tax and then all following years, but with an electric car, you never have to pay. Whilst the EV road tax exemption isn’t planned to change soon, there may be some updates on how this works in the future as combustion engines are phased out.

  • Road tax for hybrid cars

    There have been a few changes to the way road tax is calculated over the years. The most recent change affects all hybrid cars. Since 2017, VED has been based on CO2 emissions and car price, but before 2017 it was based on CO2 emissions and fuel type. Explore below to find out the road tax on hybrid cars.

  • Road tax for hybrid cars registered on or after 1 April 2017

    You’ll typically pay less road tax for hybrid cars, but it’s not as simple as it is for full EVs. PHEVs and full hybrids pay anywhere between £0-£135 every year, depending on emissions.

    Low emission hybrid cars will pay a reduced rate in the first year but then will have to pay increasing amounts after that.

    The current road tax rates for hybrid cars are:

    First year

    • 0g/km - £0
    • 1-50g/km - £0
    • 51-75g/km - £15
    • 76-90g/km - £105
    • 91-100g/km £130
    • 101-110g/km £150

    Second year

    • 0g/km - £0
    • 1-50g/km - £145
    • 51-75g/km - £145
    • 76-90g/km - £145
    • 91-100g/km £145
    • 101-110g/km £145
  • Road tax premium rate

    There’s also another rate that applies to cars worth over £40k. So if your hybrid car was over £40,000 from new, you will pay an additional fee for five years from year 2. This applies to all hybrid cars, but not to fully electric cars.

    The premium supplement for hybrid vehicles over £40k adds £335 to your annual road tax. After five years, the premium supplement is no longer paid. This is something to consider when searching for your next hybrid car from new.

    This premium supplement is not applied to fully electric cars.

  • Vehicle Excise Duty for hybrid cars registered between 1 March 2001 and 31 March 2017 works slightly differently. Road tax for hybrid cars that fit in this band is worked out based on fuel type and CO2 emissions.

    You don’t have to pay road tax if your hybrid car:

    Was registered between 1 March 2001 and 31 March 2017
    And produces under 100g/km

    Hybrid cars pay a reduced rate compared to petrol and diesel cars. Explore annual costs below.

    Band

    CO2 Emissions

    Road tax price

    A

    Up to 100g/km

    £0

    B

    101 to 110g/km

    £10

    C

    111 to 120g/km

    £20

    D

    121 to 130g/km

    £120

    E

    131 to 140g/km

    £145

    F

    141 to 150g/km

    £160

    G

    151 to 165g/km

    £200

    H

    166 to 175g/km

    £240

    I

    176 to 185g/km

    £265

    J

    186 to 200g/km

    £305

    K

    201 to 225g/km

    £330

    L

    226 to 255g/km

    £575

    M

    Over 255g/km

    £590

  • Electric car tax benefits

    There are more tax benefits for electric cars than just not having to pay Vehicle Excise Duty. This includes not having to pay tax on petrol and diesel, congestion charge exemption among others.

  • Petrol & diesel tax

    One of the biggest costs that electric cars avoid is petrol and diesel. Fuel is heavily taxed by the government so this is one of the main ways you save money.

  • Employers pay less National Insurance Contributions (NICs)

    One of the main ways employers benefit from supplying EVs as company cars is by paying less NICs. This makes electric cars an even cheaper option for your company.

  • Electric car capital allowance

    Businesses can also deduct the full price of a new electric car from their profits by claiming capital allowance.

  • VAT claims

    If you can prove your electric car is used only for business, then you may be able to claim back the VAT.

  • The future of taxing electric cars

    Electric car owners don’t need to pay road tax but this may, eventually, change. With the ban on producing purely petrol or diesel engines currently set for 2030 in the UK, the government is likely thinking of new ways to reintroduce road tax for vehicles.

    This is something that has been recently discussed by the government as if nothing changes from now until 2040 there will be no tax revenue from cars.

    So, to combat this the government are looking at new systems for taxation. Electric cars and vehicles with low emissions will eventually be charged to use the roads.

    The Parliament’s Transport Committee said they want drivers to pay the same or less when it comes to VED and fuel duty with a special focus on ensuring vulnerable groups and rural areas are not hit hard by any changes.

    There are no concrete plans on how this will work but they are currently working on it. But again, this is unlikely to be introduced for a while.

    Information is correct at the time of writing.

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