Tax benefits of EVs
Any brand-new car with an RRP of less than £32,000 that emits less than 50g of CO2 per kilometre driven (g/km) and has a zero-emissions range of 70 miles or more is eligible for a grant off the purchase price of up to £1,500. You could be saving money by driving an EV before you’ve even got behind the wheel.
Vehicle Excise Duty, which is commonly referred to as road tax, is another area in which EV drivers can have fewer outgoings compared to those in ICE cars. Drivers of pure EVs that have a list price of less than £40,000 don’t have to pay a penny in road tax.
And if you drive in central London, you won’t have to pay the daily London Congestion Charge. This exemption has the potential to save an EV driver more than £3,000 every year if their daily commute takes them through the zone, which was expanded in 2021.
Birmingham’s clean air zone (CAZ) surcharge has also been introduced on petrol and diesel cars which makes an upgrade to an EV more attractive as it will help you escape these hefty annual charges.
Company car and salary sacrifice EV drivers get an even better deal. The Benefit-in-Kind (BIK) tax, and the rates for zero-emission EV drivers are tiny in comparison to people in a similar position who drive a car powered by petrol or diesel.
In tax year 2022, the BiK rate on an EV is just 2% and it remains frozen at that rate until 2025. In the same period, the driver of a typical car emitting 102g/km of CO2 would have pay 25% BiK tax.