Harry Leahey

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Owners of electric cars in the UK will have to foot the bill for Vehicle Excise Duty (VED) from 2025. 

The move was announced during today’s Autumn statement delivered by Chancellor of the Exchequer, Jeremy Hunt. 

As the Office for Budget Responsibility estimates half of new vehicles will be electric by 2025, Hunt said the decision to apply road tax to EVs was made to make the British motoring tax system fairer. 

Until now, electric cars have been exempt from paying any VED, also known as ‘road tax’, but will now incur an annual charge of £10 in the first year once registered on or after April 1 2025. From the following year of registration onwards, VED will then increase to £165, while electric vans will be charged £290 in VED. 

VED is a form of tax applied on every vehicle, and the amount that's paid is determined by the amount it pollutes, as well as other factors including its list price. 

The move comes following research from the AA, which showed surging cost of electricity was a deterring or delaying factor for 70 percent of drivers switching to electric, while findings from the Society of Motor Manufacturers and Traders (SMMT)  saw a slow down in EV sales in recent months. 

Edmund King, president of the AA backs the tax on EVs should incentives for the transition to electric vehicles remain in place, though argued it “should still be lower than for diesel or petrol vehicles", as increasing tax rates could “slow the road to electrification”. 

The tax on EVs will apply ahead of the UK ban on new petrol and diesel cars from 2030. 

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Harry Leahey 17/11/22