Electric vehicles (EVs) will no longer be exempt from vehicle excise duty (VED) from April 2025.
Chancellor Jeremy Hunt announced that he wanted to make motoring taxes “fairer” as he revealed the policy in his autumn statement.
He said: “Because the OBR (Office for Budget Responsibility) forecast half of all new vehicles will be electric by 2025, to make our motoring tax system fairer I’ve decided that from then, electric vehicles will no longer be exempt from vehicle excise duty.”
Mr Hunt said company car tax rates will remain lower for EVs than traditionally fuelled vehicles, but will increase by one percentage point for three years from 2025.
RAC head of policy Nicholas Lyes said: “After many years of paying no car tax at all, it’s probably fair the Government gets owners of electric vehicles to start contributing to the upkeep of major roads from 2025.
“While vehicle excise duty rates are unlikely to be a defining reason for vehicle choice, we believe a first-year zero-VED rate benefit should have been retained as a partial incentive.
“But we don’t expect this tax change to have much of an effect on dampening the demand for electric vehicles given the many other cost benefits of running one.
“The fact that company car tax increases on EVs will be kept low should also keep giving fleets the confidence to go electric, which is vital for increasing the overall number of EVs on our roads.”
