Cost savings

Tax savings

To see how much VED and ‘benefit in kind’ tax (if you’re a company car driver) you might save driving an electric car, compared to your current car, use our interactive Car Tax Calculator.

Car tax calculator

Save on road tax

The way vehicle tax is calculated has changed for cars first registered with DVLA from 1 April 2017. For the first year this is based on CO2 emissions; after that, the amount of tax to be paid depends on the fuel type of the vehicle.

So by choosing a low emission vehicle, you’ll save yourself money. Just how much?  All pure electric cars (costing less than £40,000) attract a rate of £0 per year; whilst all alternative fuel vehicles (which includes plug-in hybrids) receive a £10 discount each year.

VED rates for cars first registered from 1 April 2017

Band CO2emissions (g/km) Petrol & Diesel cars – 2017 First Year Rate Alternative Fuel cars – 2017 First Year Rate
A 0 £0 £0
B 1-50 £10 £0
C 51-75 £25 £15
D 76-90 £100 £90
E 91-100 £120 £110
F 101-110 £140 £130
G 111-130 £160 £150
H 131-150 £200 £190
I 151-170 £500 £490
J 171-190 £800 £790
K 191-225 £1,200 £1,190
L 226-255 £1,700 £1,690
M Over 255 £2,000 £1,990

VED standard rates for second tax payment onwards

Fuel Type Single 12 month payment Single 6  month payment
Pure Electric £0 £0
Alternative Fuel £130 £71.50
Petrol or Diesel £140 £77
Cars not solely powered by petrol/diesel are classified as alternative fuel vehicles. These include plug-in hybrids, range extender electric, bioethanol and liquid petroleum gas cars.

Vehicles with a list price of more than £40,000

You have to pay an extra £310 a year if you have a car with a ‘list price’ (the published price before any discounts) of more than £40,000. You only have to pay this rate for 5 years (from the second time the vehicle is taxed).

Save on ‘Benefit in Kind’ company car tax

For company car drivers, electric and hybrid cars emitting 50 g/km of CO2 or less incur a ‘Benefit In Kind’ tax of only 9% in 2017/18, compared to 22% for a diesel car emitting 100g/km of CO2.

This can represent huge savings for the driver.

To discover just how much tax you could save, use our Car Tax Calculator.

Car tax calculator

For further information, please see OLEV’s tax factsheet.

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