UK: Electric Car Owners to Pay Road Tax from 2025

Jeremy Hunt, chancellor of the United Kingdom, announced that electric car owners will have to pay vehicle excise duty (VED) or road tax from 2025. According to industry figures, the imposition of VED could slow down the transition to electric cars.

However, electric car drivers in the United Kingdom could see their on road running costs increasing sooner, with a planned increase in fuel duty in March 2023 adding 12 pounds a litre to the current diesel and petrol costs.

Documents from the Office of Budget Responsibility (OBR) projected a 5.7 billion pounds uplift in receipts for 2023, assuming an increase in fuel duty in line with inflation along with the cut announced by Rishi Sunak’s budget in March 2022 coming to an end.

While the OBR shows a potential increase in fuel duty by of 23 percent, the chancellors of the country have used their budgets to freeze increase in the fuel duty since 2011, and Jeremy Hunt might yet follow suit in the spring. Jeremy Hunt did not announce any more moves or a wide reform of fuel duty. The fuel duty has charged at the fuel pumps raises the bulk of around 35 billion pounds in motoring taxes for the treasury, but the figure is forecast to decrease rapidly with the transition to electric cars.

According to reports, electric vehicles make up an increasing proportion of the cars on the roads of the United Kingdom, meaning the revenues to the UK Treasury from both fuel duty and VED are all set to decrease. The sale of the new petrol or diesel cars will be banned in the country from 2030.

Electric vehicle will be charged the lowest band for new cars in the first year, which is currently 10 pounds, and will then pay the same rates as the other vehicles. More expensive cars will also be surcharged, potentially affecting the new electric vehicles.