Electric vehicles to lose VED exemption

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Electric vehicle (EVs) owners will be hit by a new tax from April 2025.

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Chancellor Jeremy Hunt announced in his Autumn Statement that zero-emissions vehicles would lose their Vehicle Excise Duty (VED) exemption from that date.

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EV owners who do not currently pay VED must pay an annual fee of up to £165 for cars and up to £290 for vans.

Mr Hunt said it would “make our motoring tax system fairer” as the Office of Budget Responsibility (OBR) has forecast that half of all new vehicles will be electric by 2025.

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VED is a tax levied on UK vehicles depending on when they were first registered and their carbon emissions.

The Treasury said the changes are expected to raise an additional £1.6 billion by 2027/28.

AA president Edmund King said they would “slow down the road to electrification”.

He added: “This could delay the environmental benefits and stall the introduction of EVs in the second hand car market.

“Unfortunately, the Chancellor’s EV taxation actions will reduce incentives to switch to electric vehicles.”

Ian Plummer, director of automotive classified ads company Auto Trader, said the new rule policy, combined with the elimination of other incentives and higher energy bills, “will drive more buyers away from EVs”.

He added: “An excise duty raid is deeply unhealthy and sends the wrong message if we are serious about mainstreaming EVs.”

Mike Childs, head of policy at Friends of the Earth, said EVs have a “big role” in creating a “clean transportation system”.

He warned that the announcement would “do little to persuade people to choose green cars”.

We estimate that fuel duty revenue from cars could be reduced by £5 billion a year by 2028

From 1 April 2025 new pure electric cars registered if they cost more than £40,000 will also lose the exemption from paying an extra £355 per year.

Mike Haus, chief executive of the Society of Motor Manufacturers and Traders (SMMT), described it as a “sting in the tail”, claiming it would “unfairly penalize” people who buy electric cars, which are more expensive than conventional electric cars. Typically cost more than conventional fueled models. ,

The sale of new petrol and diesel cars and vans will be banned in the UK from 2030.

The latest SMMT figures show that the number of new pure electric cars registered during the first 10 months of the year was 38.4% higher than the same period in 2021.

Steve Gooding, director of the RAC Foundation, said it is “no surprise” that EVs have lost their VED exemption as “manufacturers are still struggling to meet demand” amid a supply shortfall.

He claimed the Treasury faces a “big tax question” about falling fuel duty income as more motorists switch from petrol and diesel vehicles.

“We predict that fuel duty revenue from cars could be reduced by £5 billion a year by 2028,” he said.

Mr Hunt also announced that company car tax rates would rise by one per cent for three years from 2025.

Credit: www.standard.co.uk /

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