EV tax introduction in Budget comes under fire

The Chancellor’s decision to make electric car owners pay Road Tax from April 2025 risks slowing the take-up of electric vehicles.

The SMMT said the UK needed a tax framework that encouraged the purchase of EVs rather than making them more expensive.

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.”

UHY Hacker Young, the national accountancy group also criticised the move. Paul Daly, partner at UHY Hacker Young, said: “It’s going to be increasingly difficult to get people to switch to electric cars if they are more expensive to buy than petrol or diesel cars and no cheaper to run.”

“Saving several hundred pounds a year in Road Tax is a meaningful incentive to switch to electric. Once that’s gone an electric car is less appealing to many.”

“Along with the phasing out of grants, the sky-high price of electricity and the costs of finance as interest rates rise, the money involved in having an electric car has become a real problem for a lot of households.”

“If the Government is serious about net zero the EV market will require more support than this.”