Government to remove tax exemption for electric vehicles

In the government’s latest budget, Chancellor of the Exchequer Jeremy Hunt has revealed that the vehicle tax exemption on electric vehicles will end in 2025.

One of the major benefits of having an electric vehicle has always been paying no tax, so this will be a blow to takeup. It’s just one more incentive the government is scrapping, having got rid of the last EV grants for private cars in the summer.

Can takeup of electric vehicles stay high?

Electric cars are the only vehicle type that have kept gaining in popularity, even through the pandemic. This year, EV sales have grown 16% over 2021, while most other sales fell.

But in August, almost a year earlier than planned, the Department for Transport closed the £300m plug-in car grant scheme. Instead, it says it will expand the EV charging network, as well as extending grants for other vehicles such as electric taxis, vans, trucks and wheelchair-accessible cars.

Right now, the UK’s infrastructure isn’t ready for EV growth. And with the government’s Net Zero strategy in the bin after being labelled ‘inadequate’ by the High Court, chances of hitting environmental targets is looking slim.

The now-abandoned plan aimed to double new zero-emissions vehicle registrations by 2025. Scrapping EV tax exemption and purchase grants makes that harder to achieve.

What are the pros and cons of EVs today?

Reasons to go electric:

• EVs are still tax-exempt until 2025
• Keeping sight of your usage is far easier
• Charge range is improving all the time
• Although slow, the charging network is growing
• You can get insurance designed especially for your EV
• If you own or rent a flat, there is a grant for chargepoints

Drawbacks to consider:

• The upfront cost of at-home charging
• You’ll need to factor in the cost of tax from 2025
• There’s still not that much choice in lower-cost EVs
• The cost of charging has risen – but so has the cost of fossil fuels

There are still lots of benefits to going electric, but the government needs to address the holes in its original environmental strategy and make sure incentives to buy EVs are still strong.