Jeremy Hunt announces that electric car owners will pay a road tax from 2025 | Fall 2022 statement

The chancellor announced that owners of electric cars will have to pay a vehicle levy, known as a road tax, from 2025.

Battery electric vehicles make up a growing proportion of cars on UK roads, which meant that Treasury revenues were on the wane. The sale of new petrol or diesel cars will be banned in the UK from 2030.

Experts said the extra tax could slow down the shift to electric vehicles.

The councilor, Jeremy Hunt, told the House of Commons in his autumn statement: “As the Office for Budget Responsibility projects that half of all new cars will be electric by 2025, to make our motor tax system fairer, I have decided that from then on electric cars will be It is no longer exempt from vehicle tax.

VED rates vary greatly according to emissions and the age of the vehicle, with all zero-emission vehicles currently being excluded. Electric cars will be charged at the lowest range for new cars in the first year – currently £10 – and then you’ll pay the same rate as other vehicles. Drivers of the latest diesel or petrol cars typically pay between £120 and £945 in the first year and then £165 per year for the next five years. More expensive cars are also being charged a surcharge, and likely on new EVs.

Some incentives will remain for companies to transition to cleaner vehicles. “The company’s car tax rates will remain lower for electric cars … and I will limit the rate increase to 1% per year for three years from 2025,” Hunt said.

“The prospect of additional operating costs will drive more potential buyers away from electric vehicles when other incentives are eliminated and higher energy bills erode the benefits of going electric,” said Ian Plummer, Director, Auto Trader.

It’s a “disappointing but not surprising decision,” said Gil Noel, ElectriX’s head of electric vehicles, adding: “More work will need to be done to reassure drivers that running an electric vehicle is still cheaper than driving petrol or diesel, and is also better for the environment.”

Hunt has not announced any proposals for a broader reform of fuel tariffs, contrary to some expectations. Fuel surcharges at the pumps raise the bulk of about £35 billion in car taxes for the Treasury, but that figure is expected to fall sharply with the move to electric cars, and officials have said new sources of revenue are needed.

Road pricing, which charges vehicles according to distance traveled, is considered by many automakers to be the ultimate best alternative, but it has long been viewed as politically toxic.