UK finance minister Jeremy Hunt said Britain will introduce road taxes on electric cars from 2025, ending an exemption that was intended to spur adoption of zero-emission vehicles.
EVs will no longer be exempt from vehicle excise duty, Hunt said during Thursday’s Autumn Statement as he unveiled a series of tax rises and spending cuts designed to plug a 55-billion-pound ($65-billion) hole in Britain’s public finances.
The Chancellor of the Exchequer said that EVs will still have lower company car tax rates and the government will limit rate increases to one percentage point a year for three years from 2025.
The UK plans to end the sale of new cars powered only by gasoline and diesel engines from 2030, and automakers have long asked for incentives to spur the adoption of electric vehicles.
The phasing out of the road tax exemption follows the slashing of EV subsidies in the UK.
“The prospect of additional running costs will drive more would-be buyers away from EVs when other incentives are being scrapped and high energy bills are eroding the advantages of going electric,” said Ian Plummer, commercial director at online marketplace Auto Trader Group.
The measures announced Thursday will “unduly penalize” new and more expensive vehicle technologies, the Society of Motor Manufacturers and Traders (SMMT) said in a statement.
“We recognize that all vehicle owners should pay their fair share of tax, however, the measures announced today mean electric car and van buyers –- and current owners -- will face a significant uplift” in vehicle excise duties, said Mike Hawes, the SMMT’s CEO.
“We need a framework that encourages consumers and businesses to buy electric vehicles” Hawes added.