Road Tax (VED)

Motorists who purchase all-electric cars with zero emissions, pay zero Road Tax – a considerable saving in running costs over the lifetime of the vehicle.

Vehicle Excise Duty (Road Tax) and Company Car Tax

The principal innovation for 2010 is that from 1st April, differential first-year rates of Road Tax for brand new cars will be introduced in order to provide a stronger incentive to drivers at the point of purchase of a new car.

The full set of new rates is as follows:
Vehicle Excise Duty for Cars registered on or after 1 March 2001: rates from 1 May 2009 and 1 April 2010

From the table, it is evident that motorists who purchase all-electric cars with zero emissions, pay zero Road Tax – a considerable saving in running costs over the lifetime of the vehicle. For buyers of current hybrids, there are also savings: the Toyota Prius T3 Hybrid, for example, has 89 g/km, fuel consumption of 72.4 mpg, and zero Road Tax. The Honda Civic Hybrid has 109 g/km, fuel consumption of 61.4 mpg and Road Tax of £35 per year.

Company Car Tax

Electric cars are exempt from company car tax for five years from April 2010. This has little impact at the present but is intended as an incentive to purchase electric cars and plug in hybrids as they come on stream from 2011.

Fuel Tax

The fuel excise duty (fuel tax) for electricity is zero. In comparison, the fuel tax for ultra-low sulphur petrol and diesel is 54.2p per litre and the VAT rate is 15.0%.