Motor Insights
The UK Electric Car Tax Loophole: What EV Owners Really Pay in 2026
By the Voya Editorial Team • Updated June 2026 • 9 min read
The free ride is over. From April 2025, electric cars lost their zero road tax exemption, and fully electric cars are no longer exempt from road tax. Every EV on UK roads now has a bill to pay — but the detail matters more than the headline. Here is what you actually owe.
Key Takeaways
- From April 2025, most EVs pay the £200/yr standard rate of road tax (VED) — the same as petrol and diesel cars. Electric vans are also liable from April 2025.
- New EVs registered from April 2026 pay just £10 in their first year of vehicle excise duty before moving to the standard rate — the only real "loophole" left for electric car drivers.
- The expensive car supplement now hits EVs with a list price over £50,000 at £440/yr in years 2–6, but the higher threshold spares many models like the Tesla Model Y and Kia EV6.
- Company car BiK on EVs rises from 3% to 4% in April 2026, though it remains far below diesel cars and most hybrids.
- A 3p per mile pay-per-mile tax for EVs arrives in April 2028 on top of VED, making 2026–27 the last of the simpler years for electric car road tax.
01 — THE BASICS
How Electric Car Road Tax Works in 2026
Road tax — formally called vehicle excise duty (VED) — is the annual tax every vehicle keeper must pay to use UK roads. As of 2026, all electric vehicles pay vehicle tax on the same basis as petrol and diesel vehicles. The zero-rate exemption that once made EVs uniquely cheap to keep is gone.
Understanding vehicle excise duty matters because road tax is calculated primarily from registration date and the car’s original list price — not range or battery size. Two EVs of similar spec can attract very different bills depending on when they were first registered.
| When the EV was registered | Road tax (2026) |
|---|---|
| 1 April 2017 – 31 March 2025 | £200/yr |
| 1 March 2001 – 28 Feb 2017 (legacy bands) | £20/yr |
| New, from 1 April 2026 | £10 yr 1, then £200 |
A 2022 Skoda Enyaq (under £50,000, registered after April 2017) pays the standard rate. A 2015 Nissan Leaf (registered before April 2017) pays just £20/yr. The date on the V5C logbook — not the purchase date — determines everything. Electric vans and light goods vehicles also now pay road tax, ending a long-standing advantage for commercial electric vehicle owners.
02 — NEW CARS
New EVs: The £10 First-Year "Loophole" From April 2026
From 1 April 2026, new electric cars registered on or after that date pay just £10 in VED for their first 12 months — regardless of list price, battery size or range. From year two, the car moves to the standard rate.
This £10 rate is unique to zero emission vehicles and lower-emission vehicles emitting up to 50g/km CO₂. That gap is the main remaining tax advantage versus new petrol and diesel models, where first-year VED can run into hundreds — or even thousands — of pounds based on carbon emissions.
Worked example
Buy a new Tesla Model Y in May 2026 with a list price of £48,000. You pay £10 VED in year one. From May 2027, assuming the car sits under the £50,000 threshold, you pay the standard rate each year thereafter — versus a new petrol or diesel car with moderate CO₂ output facing a first-year bill of £200 or more.
It’s also worth noting the Electric Car Grant, available for new zero-emission vehicles priced at £37,000 or less. Eligible cars must have zero CO₂ emissions and a range over 100 miles, and the grant — up to £3,750 — is deducted from the purchase price by the dealer, further reducing the upfront cost of new cars entering the market at lower price points.
03 — STANDARD & OLDER
The Standard £200 Road Tax and Older EVs
By 2026, the default road tax for most modern EVs is the standard rate, matching petrol and diesel from year two onwards. All cars registered between 1 April 2017 and 31 March 2025 now pay this amount regardless of battery size, range, or how much road tax they previously avoided.
Older electric vehicles registered between 1 March 2001 and 28 February 2017 keep the historic £20/yr rate — a genuine long-term saving for early adopters who bought zero emission cars before the modern VED structure came into force.
2016 Nissan Leaf
£20/yr
Registered pre-April 2017
2021 Kia EV6
£200/yr
Standard rate
2026 new EV
£10 → £200
£10 year one, then standard
Even where the bill is £20, EV drivers must still tax the vehicle with the DVLA each year. An untaxed vehicle risks automatic fines. The requirement to pay road tax applies to every car on UK roads — no exceptions for alternatively fuelled vehicles or zero emission vans.
04 — LUXURY CAR TAX
Luxury Car Tax: The Expensive Car Supplement at £50,000+
The expensive car supplement, often called luxury car tax, is an additional VED charge for cars costing above a set list price at first registration. It sits on top of the standard rate and applies in years 2–6 of a car’s life.
From April 2026, the threshold for the supplement for electric and other zero emission vehicles rose from £40,000 to £50,000. The supplement is £440/yr for EVs over the threshold. For petrol, diesel and hybrid vehicles, the threshold remains £40,000.
The loophole, explained
The new £50,000 threshold applies retrospectively to EVs registered after April 2025. A Tesla Model Y Long Range registered in June 2025 at £47,000 — initially caught by the old £40,000 threshold — now falls below the new limit, so from April 2026 it pays only the standard rate. A £63,000 BMW i5, however, still attracts the supplement: standard rate plus £440 = £640/yr in years 2–6.
The supplement applies for five years after registration, then the car reverts to the standard rate regardless of its original price. EVs registered after April 2025 pay it only if their list price exceeds the threshold.
05 — COMPANY CARS
Company Car Tax: BiK on EVs Rising From 3% to 4% in April 2026
Benefit-in-Kind tax on company cars is based on the vehicle’s P11D value multiplied by a percentage linked to CO₂ emissions. For fully electric company cars, that percentage has risen steadily — from 0% in 2020/21, to 2%, then 3%, and now 4% from 6 April 2026.
Worked example
A company Tesla Model Y with a £48,000 P11D value creates a taxable benefit of £1,920 at 4%. An employee on 40% income tax pays £768/yr; on 20%, that drops to £384/yr. Compare a similar diesel SUV at 30–37% BiK, where the annual tax bill runs well above £3,000.
For employers, the advantages stack up. Businesses buying new fully electric cars can claim 100% first-year capital allowances; reclaim 50% of the VAT on lease payments; and claim an 18% main-rate capital allowance on used electric cars. Installing a home charging point for a company car is not a taxable benefit for the employee, and lower Class 1A National Insurance on low BiK values reduces employer costs further. Company car tax on EVs remains one of the key advantages as more drivers switch to electric.
06 — WHAT'S COMING
Pay-Per-Mile EV Tax From 2028: 3p per Mile Explained
From April 2028, the UK government introduces a pay-per-mile tax called eVED — a charge on top of standard VED, designed to replace falling fuel duty revenue as more drivers move away from petrol and diesel.
The rates are straightforward: 3p per mile for electric vehicles, and 1.5p per mile for plug-in hybrids (which already contribute through fuel duty on the petrol or diesel they burn). The 3p rate is expected to rise with inflation after launch.
5,000 miles/yr
£150
eVED, on top of VED
8,000 miles/yr
£240
eVED, on top of VED
10,000 miles/yr
£300
eVED, on top of VED
Drivers will estimate mileage and pay upfront, then reconcile against actual mileage recorded at MOT. The government has ruled out GPS or location tracking — meaning a new administrative step, but not a surveillance system. This makes 2026–27 the last years before pay-per-mile complexity begins.
07 — THE COMPARISON
EV vs Petrol and Diesel: Total Tax and Running Costs
Road tax has converged: the standard rate now applies equally to electric, petrol and diesel vehicles registered in the modern era, removing one of the historic advantages for EV owners. But EV running costs remain meaningfully lower once you look beyond VED.
A 10,000-mile-per-year EV owner charging at home at roughly 20–25p/kWh, at around 4 miles per kWh, spends approximately £500–£625/yr on electricity. A comparable petrol or diesel car at 40mpg and ~£1.60/litre spends £1,150–£1,200/yr — and that includes fuel duty baked into every litre. EV drivers avoid fuel duty entirely.
The EV Chargepoint Grant covers up to 75% of installing a home charging socket, up to £500. Maintenance stays lower too — fewer moving parts, no oil changes, reduced brake wear — though heavier batteries mean faster tyre wear, and insurance premiums for vehicles with high repair costs can be steep. Clean-air zones and congestion schemes still tend to favour zero emission cars, though some city exemptions are being reduced or time-limited.
08 — ACTION PLAN
How to Reduce Your EV Tax Bill in 2026 and Beyond
The tax advantages for electric car owners are shrinking, but smart choices on list price, usage and charging still cut the overall bill.
- Keep the list price under £50,000. This avoids the £440/yr expensive car supplement for EVs registered from April 2025 onward. Many trims of the Skoda Enyaq and Kia EV6 sit comfortably below the threshold.
- Plan your mileage now. From April 2028, the 3p per mile eVED charge makes lower mileage more valuable. A 5,000-mile driver pays half as much as a 10,000-mile driver.
- For company cars, choose modest P11D values. Even at 4% BiK, the savings over diesel and hybrid models are substantial — but heavily optioned luxury models inflate the taxable benefit.
- Factor total cost of ownership. Combine road tax, future eVED charges, electricity tariffs, maintenance and potential clean-air charges when comparing EVs with petrol and diesel cars.
- For used EV buyers, check two figures: the original registration date and the manufacturer's list price. Those determine whether you pay the standard rate, the £20 legacy rate, or the expensive car supplement.
09 — FAQ
FAQ: Electric Car Tax in the UK
Do any electric cars still pay £0 road tax in 2026?
No mainstream EVs pay £0 VED in 2026 — the complete exemption ended on 1 April 2025. A few very specific categories (historic vehicles over 40 years old, certain disabled-class vehicles, specialist agricultural vehicles) may still qualify for £0 even if electric. For all road-going EVs in normal private or company use, the bands are £10 (first year for new cars), the standard rate, or £20 for older cars registered before March 2017. No car is exempt simply for being electric.
If I buy a used EV in 2026, what road tax will I pay?
The VED you pay depends on when the car was first registered, not when you buy it. A 2021 Kia EV6 (registered post-April 2017) attracts the standard rate; a 2016 Nissan Leaf (pre-April 2017) stays on £20/yr. If the used EV was first registered from April 2025 and its original list price exceeded £50,000, it may also carry the £440/yr expensive car supplement in years 2–6. Check the original registration date on the V5C logbook or via the DVLA online checker before buying.
Does low mileage cut my VED bill before 2028?
No. Until eVED begins in April 2028, VED is a flat annual charge based on registration date and list price — driving fewer miles does not reduce it. Low mileage only starts to matter once pay-per-mile arrives: from 2028, a 5,000-mile EV driver pays £150 in eVED while a 10,000-mile driver pays £300, but both still pay the same standard VED on top.
How will pay-per-mile tax affect company EVs?
Company electric cars will be subject to the 3p per mile eVED charge from April 2028 in the same way as privately owned EVs. Liability sits with the registered keeper — typically the leasing company or fleet operator — and is separate from BiK. Employees still pay benefit tax on the 4% BiK rate for private use, and employers will need mileage-recording systems.
Do plug-in hybrids and hybrid cars get better tax treatment than EVs?
From April 2025, plug-in hybrids lost most of their VED discounts. Hybrids and PHEVs now pay the same standard road tax from year two as petrol, diesel and electric cars, and those over £40,000 also face the expensive car supplement. From April 2028, plug-in hybrids will pay a lower 1.5p per mile eVED than the 3p for pure EVs — but they still face fuel duty and higher BiK rates than electric company cars.
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