Electric vehicles have transformed the road tax landscape in the UK. With zero tailpipe CO2 emissions, EVs attract the most favourable VED rates available — but they are not entirely free. Here is a complete explanation of electric vehicle tax in the UK for 2026.
VED Rates for Electric Vehicles
Zero-emission electric vehicles registered from April 2025 pay £0 for the first-year rate — the same as the lowest CO2 band. From year two onward, the standard reduced rate for zero-emission vehicles is £10 per year. This compares favourably to £190 per year for petrol and diesel cars. Even used EVs that are a few years old benefit from the £10 annual standard rate, making them far cheaper to tax than equivalent petrol or diesel vehicles.
The Premium Rate Still Applies to Expensive EVs
One important caveat: if your electric vehicle has a list price over £40,000, you still pay the premium supplement of £410 per year for years two through six — even though the standard rate is only £10. This means a £50,000 Tesla Model 3 Long Range costs £420 per year in road tax from year two, not £10. Only EVs under £40,000 list price escape the premium surcharge. Check the official VED rate tables on GOV.UK for full details.
Company Car BIK for EVs
For company car drivers, EVs are exceptionally tax-efficient. The BIK rate for zero-emission company cars is just 2% of the P11D value in 2026-27, rising to 5% in 2027-28. On a £50,000 electric company car, that means a taxable BIK benefit of just £1,000 at the 2% rate — compared to £18,500 for an equivalent high-emission diesel company car at 37%. This makes EVs the most cost-effective company car choice for both employer and employee.
Road Tax for Plug-in Hybrids
Plug-in hybrid electric vehicles (PHEVs) with CO2 emissions between 1 and 50g/km attract a first-year rate of just £10 and a standard rate of £50 per year. PHEVs above 50g/km but below 75g/km pay £25 first year and £50 standard. However, HMRC has been tightening the rules: from April 2025, the criteria for the lowest PHEV bands require a minimum electric-only range of more than 70 miles. Always verify the exact VED band for a specific PHEV model before purchasing.
VED Exemption for Low-Emission Vehicles
Hybrid vehicles that cannot be plugged in — sometimes called self-charging hybrids — do not qualify for reduced VED rates based on their hybrid status alone. Their road tax is based on their total CO2 emissions, which can be similar to a petrol car. Only vehicles with a plug and genuine zero-emission capability qualify for the reduced EV rates. Do not assume a hybrid gets EV-style VED treatment.
London Congestion Charge and EVs
While not strictly road tax, electric vehicles qualify for a 100% discount on the London Congestion Charge — worth up to £15 per day. From 2025, this discount applies only to vehicles meeting the Ultra Low Emission Discount (ULED) criteria, which includes fully electric vehicles. Register your EV with Transport for London to claim the discount. Other UK cities are introducing similar EV incentives for parking and clean air zones.