Over 500,000 electric vehicle car owners must now pay ROAD TAX from 2025
Updated: Nov 18, 2022
Owners of electric cars are set to start paying Vehicle Excise Duty (VED) from 2025, the chancellor has announced in the Autumn Statement.
New zero emission cars registered on or after 1 April 2025 will be “liable to pay the lowest first year rate of VED (which applies to vehicles with CO2 emissions 1 to 50g/km) currently £10 a year”.
From the second year of registration, they will move to the standard rate of VED which is currently £165 a year.
A full list of current VED rates is available here.
Already-registered pure battery-electric vehicles (BEVs) will also have to pay the standard rate from 2025.
According to The Treasury’s impact assessment this will bring in £515million in 2025-26, £985million in 2026-27 and nearly £1.6billion in 2027-28.
Steve Gooding, Director of the RAC Foundation, said: “It shouldn’t have come as a surprise that the pump-priming holiday electric vehicles have enjoyed from vehicle excise duty would end, not least because manufacturers are still struggling to meet the demand for EVs in their showrooms.
“The wider question, though, is where exactly the Chancellor will go from here on the bigger tax question – the decline in fuel duty income as we leave the petrol and diesel era behind.
“Whilst there are only 540,000 battery-electric cars on the road in the UK at the moment, out of a total fleet of 33 million, as they become more common we predict fuel duty revenue from cars could drop by £5 billion a year by as early as 2028.”
Mike Hawes, SMMT Chief Executive, said: “We recognise that all vehicle owners should pay their fair share of tax, however, the measures announced today mean electric car and van buyers – and current owners – will face a significant uplift in VED. The sting in the tail is the VED supplement which will unduly penalise these new, more expensive vehicle technologies. The introduction of taxes should support road transport decarbonisation, and the delivery of net zero, rather than threaten both the new and second-hand EV markets.
“With a ZEV mandate on the way for car and van manufacturers, we need a framework that encourages consumers and businesses to buy electric vehicles. We look forward to working with government on how to transition the market and ensure the tax framework on road users supports this objective.”
