How much tax will I pay on an electric car?
Free road tax has made electric cars an attractive choice in recent years.
Used EVs usually have lower running costs, with charging often costing less than filling up with petrol or diesel. Road tax is an important expense for any car owner, and although EVs were previously exempt, UK rules are changing. To keep you fully up to date, the experts at CarSupermarket.com have put together a complete guide to electric car road tax, covering everything from the current regulations to upcoming changes and what they mean for you.
How much will electric car tax be in 2025/2026make it relevent for 20205/2026?
From 1 April 2025 onwards, all electric car owners in the UK pay the standard road tax rate of £195 per year, no matter when their vehicle was registered. This means the previous exemptions and reduced rates for electric vehicles have ended, and this applies through 2025 and into 2026.
Road tax on electric cars over £40,000 in 2025/2026
If you own an electric car registered on or after 1 April 2025 with a list price over £40,000, you’ll need to pay an extra expensive car supplement as part of your road tax. This is sometimes called the luxury car tax.
The list price includes the manufacturer’s published price before registration and before any discounts, plus any optional extras or upgraded trim levels. So, for example, a car priced at £36,000 with £5,000 of added features will count as over £40,000 and will be subject to this extra charge.
The expensive car supplement adds £425 per year to your standard road tax payment, starting from the second tax year you own the vehicle. This surcharge applies for five years and is the same for petrol, diesel, electric and alternative fuel cars.
Important:
If your electric vehicle was registered before 1 April 2025 and is zero emission, you do not have to pay this extra charge.
From April 2025, all electric cars pay the standard road tax rate of £195 per year (unless exempt as above) plus any applicable supplements.
In total, for cars over £40,000 registered after April 2025, the annual road tax cost will be around £620 (£195 standard rate plus £425 supplement).
Updated: 02/01/2026: From 1st April 2026, Vehicle Excise Duty (VED) rates will increase in line with inflation.
Currently, any car with a P11D (list price) of £40,000 or more has to pay the Expensive Car Supplement (ECS). This costs £425 per year and applies for five years, starting from the second year after the car is registered.
From 1st April 2026, the ECS threshold for zero-emission cars will increase to £50,000. This change will be backdated to cars registered from 1 April 2025, meaning many electric cars priced between £40,000 and £50,000 will no longer be affected.
However, there is one exception. If a zero-emission car registered after 1 April 2025 is sold before April 2026, the £40,000 threshold will still apply to the new owner for one year.
For petrol, diesel and hybrid cars, nothing changes - the ECS threshold remains £40,000.
Will I pay electric car tax per mile?
Before the 2024 UK Budget, there was quite a bit of discussion about introducing a pay-per-mile road tax specifically for electric vehicles. The idea was to replace the current fixed annual Vehicle Excise Duty (VED) with a ‘road usage charge’ that would bill EV owners based on how many miles they actually drove. Early estimates suggested this could have been around 6p per mile plus VAT.
This kind of system would have aimed to make road tax fairer, since electric cars don’t pay fuel duty, which is a big part of government fuel tax revenue. It would have meant that people who drive more would pay more tax, and those who drive less would pay less.
In the Autumn 2025 Budget, Chancellor Rachel Reeves announced a new pay‑per‑mile charge for EVs. Starting in April 2028, electric car owners will pay 3p per mile, while plug-in hybrid drivers will pay 1.5p per mile. These rates will rise each year with inflation.
The government plans to check mileage annually - usually at the car’s MOT, or for new cars, around their first and second registration anniversaries.
Company car tax on electric cars
Company car tax is also known as Benefit in Kind (BiK) and paid every year when a company car is used for personal use as well as work. You might’ve wondered why electric cars are so often favoured as company cars.
This is because company car tax rates are decided by the follow factors:
The car’s value
Factor 1CO2 emissions
Factor 2EV mileage range
Factor 3Income tax bracket
Factor 4Fully electric cars remain at the lowest end of the scale when it comes to CO₂ emissions, which means you’ll benefit from the lowest Benefit-in-Kind (BIK) tax rates available in the UK. For the 2025/26 tax year, the BIK rate for electric vehicles is set at 3% of the car’s P11D value – that’s the official list price including VAT and optional extras. In contrast, petrol and diesel cars usually face BIK rates ranging from 25% to 37%, depending on their CO₂ emissions.
If your electric car has a real-world electric range below 129 miles, the BIK rate may be a little higher, but nearly all fully electric vehicles will still pay 5% or less, making them highly tax-efficient company cars. This taxable percentage represents how much of your EV’s value is subject to tax. For example, on a £50,000 electric car, 3% of that value (£1,500) counts as taxable benefit. Your actual annual tax bill depends on your personal income tax band: at the basic 20% rate, this means paying just £300 a year.
Compare that with a £50,000 petrol or diesel vehicle with a typical 25% BIK rate – where the taxable amount is £12,500 – resulting in an annual tax of £2,500 for the same income band. That’s a saving of around £2,200 every year just on company car tax alone.
This favourable BIK rate, combined with lower running costs and reduced maintenance expenses, makes electric vehicles one of the smartest choices for company car drivers, salary sacrifice schemes, and anyone looking to reduce their overall tax burden while driving greener.
Company car tax rates for electric vehicles changed on 1 April 2025, with the Benefit-in-Kind (BIK) rate increasing by 1% each year over the next three years.
So, as of the 2025/26 tax year, the BIK rate for electric cars is now 3%, up from 2% in 2024/25. The rates will continue to rise as follows:
- 2025/2026 – 3%
- 2026/2027 – 4%
- 2027/2028 – 5%
While these increases mean electric cars are becoming a bit more expensive to run as company cars, they still offer significant savings compared to petrol or diesel vehicles. Thanks to their low CO₂ emissions and favourable tax treatment, EVs remain one of the most cost-effective and environmentally friendly choices for company car drivers in the UK.
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