Electric car owners could be paying “three times more tax than petrol or diesel cars” when new Vehicle Excise Duty (VED) fees are introduced, according to an expert.
Matthew Walters, Head of Consultancy Services and Customer Value at ALD Automotive | LeasePlan UK, warned rules changes would add over £1,000 to motorists’ bills.
He called out the Government’s “blanket approach” to taxing EVs and claimed the move sends “mixed messages” to motorists considering switching away from combustion models.
It comes after Jeremy Hunt made no further changes to VED rates for electric models in his Spring Budget yesterday afternoon.
It means owners of fully electric models are still on course to pay VED for the first time in April 2025.
Matthew has taken particular aim at the “expensive car supplement”, an extra fee which is applied on models valued at over £40,000.
With upfront costs still high for electric models, not changing the threshold means almost all EV motorists will be affected and slapped with extra charges.
Speaking after the Spring Budget, Matthew opined: “Although it was inevitable that electric cars would pay vehicle excise duty (‘road tax’) eventually, the blanket approach announced in the 2022 Autumn Statement introduces unnecessary penalties compared to some petrol and diesel models.
“From April 2025, VED rates will be equalised across all cars, while new registrations priced over £40,000 will also qualify for the expensive car supplement – a £410 charge, applied to the first five annual renewals.
“In some cases, this will mean drivers are paying three times more tax than they would for an equivalent petrol or diesel car, adding over £1,000 to a three-year lease contract.
“It sends mixed messages to drivers at a time when the government is trying to encourage them to switch to battery power.”
According to HM Revenue and Customs (HMRC), the fees are being introduced to ensure “all drivers begin to pay a fairer tax contribution”.
They have accepted the move would have an impact on individuals who own an electric vehicle, van or motorcycle.
HMRC claim the move will “marginally reduce the incentive to switch to electric vehicles” due to the added fees.
But, they feel that the “impact should be minimal” given the marginal cost of charges compared to the cost of an electric vehicle.
The policy is expected to bring in an extra £515million in its first year, rising to £985million in year two and over £1.5billion 12 months later.
