Autumn Statement 2022: electric cars have to pay road tax

November 17, 2022 by

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Big changes for electric car tax are on the horizon

Electric cars will no longer be exempt from road tax from April 2025, with both the £165 annual flat rate and the £355 ‘Expensive Car Supplement’ for cars costing over £40,000 applying to EVs.

Jeremy Hunt, the Chancellor of the Exchequer, announced the changes as part of his Autumn Statement, which also saw changes for electric car company car tax revealed.

Autumn Statement 2022: road tax changes

The big news for drivers in the Autumn Statement was that electric cars will no longer be exempt from road tax. From April 2025, all cars – whether they are petrol, diesel or electric – will be subject to the £165 annual charge for Vehicle Excise Duty (VED), commonly known as road tax.

But it’s not just new EVs that will have to pay road tax from 2025: electric cars first registered from April 2017 will have the £165 fee applied to them retrospectively, ending the exemption they had previously benefited from.

The £355 annual ‘Expensive Car Supplement’, which applies to cars that cost £40,000 or more from new, will also be applied to EVs from April 2025 – although this only applies to EVs sold from that date – it is not a retrospective charge like the standard VED fee. The Expensive Car Supplement runs for five years, from the second to the sixth year of a car’s life, and will add a £2,130 tax burden to owners of expensive EVs.

Autumn Statement 2022: company car tax changes

Electric cars and ultra low emission vehicles (which emit 75g/km or less of CO2) will also see increases in the amount of company car tax they are subject to, with a 1% increase being applied in the 2025/6 financial year, a further 1% rise in 2026/7, and another 1% rise in 2027/8. This means EVs will attract a 5% Benefit-in-Kind (BiK) rate in 2027/8, while low-emission vehicles will be subject to a maximum of 21%.

Petrol and diesel cars will also see a rise in the amount of company car tax they attract, with a 1% increase for the 2025/26 financial year, but no further rises thereafter. The maximum tax threshold of 37% will also be maintained.

Autumn Statement 2022: what was missing

It had been rumoured that wide-ranging reforms to vehicle taxation would be announced in the 2022 Autumn Statement, addressing the fact that the £28 billion raised each year from fuel duty on petrol and diesel will dry up as more and more electric vehicles hit the road.

Such reforms were not forthcoming, however, despite an adviser to the former Transport Secretary Grant Shapps saying “a new form of taxation which will overhaul fuel duty and VED” was expected.

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