Electric vehicle (EVs) owners will be hit by a new tax from April 2025.
Chancellor Jeremy Hunt announced in his autumn statement that zero-emission vehicles will lose their vehicle excise duty (VED) exemption from that date. Owners of EVs who currently pay no VED will face an annual charge of up to £165 for cars and £290 for vans.
Mr Hunt said this will "make our motoring tax system fairer" as the Office for Budget Responsibility (OBR) has forecast that half of all new vehicles will be electric by 2025. VED is a tax levied on UK vehicles which depends on when they were first registered and their carbon emissions.
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The Treasury said the changes are estimated to raise an extra £1.6 billion by 2027/28. AA president Edmund King said they will "slow the road to electrification".
Mr King continues: "This may delay the environmental benefits and stall the introduction of EVs onto the second-hand car market. Unfortunately, the Chancellor's EV taxation actions will dim the incentive to switch to electric vehicles."
Mike Childs, head of policy at Friends of the Earth, said EVs have a "big part to play" in creating a "clean transport system". He warned that the announcement will "do little to persuade people to choose greener cars".
New pure electric cars registered from April 1, 2025, will also lose their exemption from having to pay an extra £355 per year if their price is more than £40,000. Mr Hunt also announced that company car tax rates will increase by one percentage point for three years from 2025.
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