 predicts, and Mr Hunt said their drivers need to contribute more to the Treasury. Buyers of battery-powered cars, which cost more initially than petrol versions but offer cheaper use per mile, had enjoyed a suite of tax incentives to entice them into the vehicles, which are now being whittled away. New electric cars registered from April 2025 will pay the lowest rate for the first year, currently £10, and will in their second year move to the standard rate, which today is £165. Older electric cars will also pay this standard rate. The move is forecast to raise £515 million for the Treasury in 2025, £985 million in 2026 and £1.6 billion in 2027. 'Dim the incentive' to switch to electric The AA warned that the tax increase could put off potential buyers of electric cars. The higher initial cost of an electric car compared to a petrol equivalent in an environment of increasing borrowing costs has sparked concern about a slowdown in take-up. The Chancellor will also scrap the zero tax rate currently enjoyed by older petrol cars with small engines registered between March 1, 2001 and March 30, 2017. Cars like the Volkswagen up! and Toyota Yaris, which produce less than 100 grams of carbon dioxide per kilometre, qualify for vehicle excise duty exemptions but will start paying from 2025. Edmund King of the AA said: 'This may delay the environmental benefits and stall the introduction of EVs onto the second-hand car market. Unfortunately the chancellor's EV taxation actions will dim the incentive to switch to electric vehicles.' Perk){kind=link}
With a suite of incentives scrapped, industry experts say drivers will feel less inclined to switch to battery-powered vehicles
Electric car drivers are to be hit by vehicle excise duty for the first time to raise £3.1bn by 2027, in a move it was claimed will threaten the shift away from petrol and diesel.
Jeremy Hunt, the Chancellor, said he was aiming for a fairer system as more cars on Britain’s roads are electric and the Treasury’s ability to tax drivers is undermined.
By 2025, half of new cars on the road will be electric, the Office for Budget Responsibility (OBR) predicts, and Mr Hunt said their drivers need to contribute more to the Treasury.
Buyers of battery-powered cars, which cost more initially than petrol versions but offer cheaper use per mile, had enjoyed a suite of tax incentives to entice them into the vehicles, which are now being whittled away.