EVs lose tax exemption
The Chancellor Jeremy Hunt has announced “that from 2025 electric vehicles will no longer be exempt from Vehicle Excise Duty”.
The decision was announced in the Autumn Statement in the Commons.
His full comment on the issue was: “Because the OBR (Office for Budget Responsibility) forecast that half of all new vehicles will be electric by 2025, to make our motoring tax system fairer I have decided that from then, electric vehicles will no longer be exempt from vehicle excise duty. Company car tax rates will remain lower for electric vehicles and I have listened to industry bodies and will limit rate increases to one percentage point a year for three years from 2025.”
Alongside this, the Treasury tweeted, “The shift to Electric Vehicles is continuing at pace as the UK moves to net zero. Therefore from 2025, road tax [sic] will be introduced for EVs so all motorists begin to pay a fair share. Support for charging infrastructure is continuing.”
RAC head of policy Nicholas Lyes reacted by saying: “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.”
However in a tweet, the AA said the Chancellor has “dimmed the switch” to EVs with new taxation.
“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,” the BBC quotes AA President Edmund King as saying.
More to follow.