 or fair that owners should start contributing? Chancellor Jeremy Hunt's 2022 Autumn Statement has split drivers and commentators' reactions. We investigate exactly what his changes to car tax rates are and what the results might be. How is VED car tax changing for EVs? The chancellor said that from April 2025, EV drivers will no longer be exempt from Vehicle Excise Duty (VED, or car tax). The treasury specifies: 'This measure will equalise the VED liability of all alternatively fuelled vehicles (AFVs) and internal combustion engine (Ice) vehicles.' The treasury adds this will also apply to both new and existing AFVs. That means current owners of EVs will also pay VED from April 2025 onwards. Assuming the VED rates don't change between now and 2025, drivers of new EVs will pay the same £10 that owners of petrol cars and the cleanest diesels pay for year-one tax. From year two, they will pay the full amount. Currently that's £165. Cars with a list price (the published price before discounts) of £40,000 will also have to pay the £355 supplementary tax for the car's second to fifth years. Some have dubbed this the Tesla Tax because it will hit all but the very cheapest EVs. The government estimates this will raise £515m in 2025-26 rising to £1.6bn in 2027-28. Currently, EV drivers pay a fraction of the amount of Benefit In Kind (BIK) tax compared with drivers of regular combustion engine models. BIK tax for EVs is frozen at 2 per cent until 2025. As a comparison, drive a car that emits 105g/km of CO2 and you'll pay 26 per cent. From April 2025 onwards, BIK tax on all vehicles, including EVs and other ultra-low emissions vehicles, will increase by 1 per cent. Rates for all emissions bands will increase up to a maximum 37 per cent. The only winners will be drivers of company cars emitting more than 170g/km of CO2, who will see no increase, and the exchequer which estimates it will make £95m in 2025-26, i){kind=link}
The Chancellor’s Autumn Statement proposes that EVs are liable to road tax from 2025. How will the changes affect you?
A roadblock in the way to the adoption of electric vehicles (EVs) or fair that owners should start contributing? Chancellor Jeremy Hunt’s 2022 Autumn Statement has split drivers and commentators’ reactions. We investigate exactly what his changes to car tax rates are and what the results might be.
The chancellor said that from April 2025, EV drivers will no longer be exempt from Vehicle Excise Duty (VED, or car tax). The treasury specifies: “This measure will equalise the VED liability of all alternatively fuelled vehicles (AFVs) and internal combustion engine (Ice) vehicles.”
The treasury adds this will also apply to both new and existing AFVs. That means current owners of EVs will also pay VED from April 2025 onwards.
Assuming the VED rates don’t change between now and 2025, drivers of new EVs will pay the same £10 that owners of petrol cars and the cleanest diesels pay for year-one tax.