EV drivers, which were exempt from vehicle excise duty, will need to pay from April 2025.
This move will make the motoring tax system “fairer” for all drivers.
UK EV drivers have less than two and half years left to enjoy tax exemptions for using their all-electric vehicles. The reason for announcing the end of the exemptions is quite simple: to make the motoring tax system fairer to all drivers.
As the number of EV sales increases, so do revenues generated by the Vehicle Excise Duty (VED) for the government. In order to curb this downward spiral, the government will end the complete exemption by April 2025.
Chancellor Jeremy Hunt said: “Because the OBR (Office for Budget Responsibility) forecasts 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.”
There are fears that this will reduce interest in EVs and potentially slow the transition. Most involved agree that this will not be the case.
The BBC reports that the RAC head of policy Nicholas Lyes has 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. Vehicle excise duty rates are unlikely to be a defining reason for vehicle choice, so 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.”
This is a likely sign of things to come for all markets where incentives are common for EV drivers.