Electric car owners face tax from 2025

Electric cars in the UK will no longer be exempt from vehicle excise duty from April 2025, in a move the government says will make the motoring tax system “fairer”.

Jeremy Hunt, Chancellor of the Exchequer, announced the change as part of his autumn statement. He says his decision is based on forecasts that half of all new vehicles will be electric by 2025.

The automotive industry gave a mixed reaction to the news, with the RAC motoring group saying it does not expect the new policy to dampen demand for electric vehicles (EVs).

However, others such as the AA fear the move will reduce the incentive for consumers to switch to low and zero-emissions cars.

Vehicle excise duty applies to vehicles on the UK’s roads. EVs are currently exempt from the tax, which has a number of different rates.

Under Hunt’s plans, electric cars registered from April 2025 will pay the lowest rate of £10 (about NZ$20) in the first year, then move to the standard rate which is currently £165.

The standard rate will also apply to EVs first registered after April 2017, reports the BBC.

Nicholas Lyes, RAC head of policy, says: “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.”