Mr Hunt had said: “And, because the OBR forecasts half of all new vehicles will be electric by 2025, to make our motoring-tax system fairer, I have decided that, from April 2025, electric vehicles will no longer be exempt from Vehicle Excise Duty.
He added: “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.”
So what is Vehicle Excise Duty and what will change for drivers of electric cars as of April 2025?
What is Vehicle Excise Duty?
Vehicle Excise Duty (VED) is popularly known as road tax. Drivers pay it when they first register their car, and then again every six or 12 months, or can pay monthly.
The tax rate a driver pays varies based on the car’s age and CO2 emissions. Drivers of vehicles that cost more than £40,000 will have to pay an additional fee, dubbed the Tesla Tax.
Do electric vehicles have to pay VED?
Until now, electric cars have been exempt from paying VED in an attempt to encourage the purchase of low-emissions and zero-emissions vehicles.
However, as the number of electric cars in the UK is increasing, the money the Government makes from road tax is facing decline. Additionally, drivers of electric cars have not been contributing to the maintenance of the roads they drive on or any of the other services that road tax payments contribute to.
HM Treasury said in a tweet: “The shift to Electric Vehicles is continuing at pace as the UK moves to net zero. Therefore from 2025, road tax will be introduced for EVs so all motorists begin to pay a fair share. Support for charging infrastructure is continuing.”
Advocates for electric cars have said the additional cost could deter people from buying electric vehicles in the future.
