Electric vehicles will no longer be exempt from vehicle excise duty from April 2025, the Chancellor announces

17 November 2022, 12:20 | Updated: 17 November 2022, 12:21

Electric vehicle owners will have to pay road tax from 2025, announces Jeremy Hunt

Electric vehicles will no longer be exempt from vehicle excise duty from April 2025, the chancellor has said.

In this morning's Autumn Statement, Jeremy Hunt announced that electric vehicle owners will have to pay road tax from 2025.

A social media post from the Treasury added that the change will ensure "all motorists begin to pay a fair share" and that government support for the charging infrastructure would continue.

With the OBR forecasting half of all new vehicles to be electric from 2025, the Chancellor said: "To make our motoring tax system fairer, I've decided that [from 2025] electric vehicles will no longer be exempt from vehicle excise duty."

"Company car tax rates will remain lower for electric vehicles and I will limit rate increases to 1% a year for three years from 2025."

Read more: Millions of people to pay more tax as Chancellor plugs £55bn black hole with Autumn Statement

Since April 2020 all zero emissions vehicles, which includes all electric cars, are exempt from both first year and subsequent years’ road tax. Currently the zero emissions band attracts zero tax, meaning all electric cars are exempt from VED.

The RAC motoring group said it was "probably fair" the government asks electric car owners to contribute to the upkeep of roads.

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It added it does not expect the change to dampen demand for electric cars.

RAC head of policy Nicholas Lyes said: “After many years of paying no car tax at all, it’s probably fair the Government gets owners of electric vehicles to start contributing to the upkeep of major roads from 2025.

“While vehicle excise duty rates are unlikely to be a defining reason for vehicle choice, we believe a first-year zero-VED rate benefit should have been retained as a partial incentive.

“But we don’t expect this tax change to have much of an effect on dampening the demand for electric vehicles given the many other cost benefits of running one.

“The fact that company car tax increases on EVs will be kept low should also keep giving fleets the confidence to go electric, which is vital for increasing the overall number of EVs on our roads.”