Starting from April 1, 2025<\/strong>, the Government will remove the exemption from Vehicle Excise Duty (VED) for all electric cars, marking the first time that zero-emission vehicles will be subject to this charge.\u00a0<\/p>\n\n\n\n
This move has sparked concern among experts, who argue that it could serve as a barrier to the adoption of electric cars, just as the Government aims to increase their numbers on the road. The change in policy is part of a wider effort by the Government to make road usage fairer, ensuring that all motorists contribute to the cost of maintaining the road network. <\/p>\n\n\n\n
However, the decision to include electric vehicles in the VED system<\/strong> could have unintended consequences for those who have already made the switch to electric driving.<\/p>\n\n\n\n
In addition to the new VED charges, electric vehicle owners will also face the Expensive Car Supplement (ECS), commonly known as the luxury car tax<\/a>. This additional charge applies to vehicles with a list price of more than \u00a340,000.<\/strong> For electric vehicles, this could mean an annual tax of \u00a3425 for up to five years, an amount that will likely deter many prospective buyers. <\/p>\n\n\n\n
According to new data from Auto Trader<\/a>, 56% of electric vehicles up to five years old currently listed on their platform exceed the \u00a340,000 threshold, compared to just 16% of petrol or diesel vehicles in the same category.<\/p>\n\n\n\n
Ian Plummer, Commercial Director of Auto Trader, highlighted that electric vehicles<\/a> are three-and-a-half times more likely to be impacted by the luxury car tax than internal combustion engine cars. This, he says, is \u201cunhelpful<\/strong>\u201d to the Government\u2019s broader goals of increasing EV adoption.<\/p>\n\n\n\n
The Government’s push to increase the number of electric vehicles on the road is central to its efforts to meet climate targets. However, experts have warned that the new car tax changes<\/strong> could make it more difficult for the Government to reach its ambitious Zero Emission Vehicle (ZEV) mandate. <\/p>\n\n\n\n
The ZEV mandate, which requires manufacturers to ensure that 28% of all vehicle sales are electric by 2030, could face setbacks if potential EV buyers are discouraged by the rising costs. <\/p>\n\n\n\n
As Steve Gooding, Director of the RAC Foundation, pointed out, the tax changes could also affect those purchasing used electric cars, as these vehicles <\/a>depreciate quickly in value.<\/p>\n\n\n\n