A leading electric car expert has defended the Government’s decision to cut incentives with Vehicle Excise Duty (VED) car tax set to rise.
David Hall, head of Power Systems UK&I at Schneider Electric, said the Government had to “stop subsidising” EVs eventually.
He feels the market can start to “run itself” with mass adoption of electric vehicles just around the corner.
The 2024/25 tax year will be the last time electric car owners will benefit from widespread car tax discounts.
Those with fully-electric vehicles are currently exempt from VED fees but this will change from April 1, 2025.
Speaking to Express.co.uk, David said: “I think this is an interesting one because at some point you have to stop subsidising a new market. We probably saw it with solar panels on roofs and loft installations and things like that.
“The Government helps start a market by incentivising and then slowly withdraws from it because once you’ve built a private commercialised institution across a country or region it starts to run itself.
“I wonder if that’s what they are doing and they have probably got more data than you and I will ever have on how far this has gone.”
Back in November 2022, HM Revenue and Customs (HMRC) first announced that electric vehicles would pay VED from 2025.
November 2022.
According to HMRC, the measure is designed to “equalise VED treatment of all zero emissions and internal combustion engine vehicles”.
HMRC states that zero-emission cars first registered on or after April 1, 2017, will be liable to pay the lowest first-year rate of VED.
However, from the second year, zero-emission cars will move to the standard annual rate.
An exemption to the Expensive Car Supplement will also end in 2025 meaning those with new cars valued at over £40,000 will be forced to pay more for up to five years.
HMRC confirms the measure will have an “impact on individuals who own an electric car, van or motorcycle”. Despite the new fees, the Government claims “favourable rates” indicate support for EV transition.
HMRC added: “To ensure all drivers begin to pay a fairer tax contribution, this measure will bring electric vehicles, which do not currently pay VED, and AFVs and hybrids, which pay a discounted rate, into the motoring tax system, in the same way as petrol and diesel vehicles.
“The Government will continue to use the tax system to support the transition to electric vehicles, including using favourable first-year VED rates for the lowest-emission cars; favourable Company Car Tax rates for low-emission vehicles, and through generous first year capital allowances for zero-emissions cars and vans as well as for EV chargepoint equipment.”
