Driving electric cars in the UK will all become more expensive, subsidies will be thrown in the trash
Electric vehicles in the UK collect significantly less tax than petrol or diesel vehicles. But this is all set to change.
The UK is wading through tough economic waters and electric or electric vehicles are likely to be sacrificed when it comes to revenue-generating change. The subsidy for battery-powered vehicles aimed at making them more common will be phased out from 2025 onwards, which means it will become more expensive to buy and drive those vehicles.
Many countries around the world have subsidies to accelerate adoption of battery electric vehicles or BEVs. These claims are intended to encourage the purchase of such vehicles and the UK has also exempted the vehicle excise tax (VED). But the country’s current financial difficulties present a major challenge for the government here and Prime Minister (Finance Secretary) Jeremy Hunt recently announced the VED will be phased out from 2025 onwards.
Driving electric in the UK is by far a much more affordable option than a petrol or diesel car because the tax is significantly less. But is it fair? “Because OBR (Office for Budget Responsibility) forecasts half of all new vehicles will be electric by 2025, to make our auto tax system fairer, I have decided that since then, electric cars will no longer be exempt from the excise tax for cars.” Hunt said.
It was a move that was not warmly received by the UK car industry over fears it could stifle the growth and prospects of electric vehicles. But it is not if the move out of the blue. The country plans to end the sale of conventional vehicles from 2030, and unlimited tax exemptions or tax breaks for electric vehicles will always be fuzzy. However, what the elimination of VED will mean for brands like Jaguar, which intends to have an all-electric lineup, remains to be seen.
Date of first publication: November 18, 2022, 11:54 am IST