Electric vehicles will be taxed more heavily, whilst polluting cars get off lightly in the UK’s new budget.

The government has just put forward its autumn statement, which will see the following new tax rules apply to cars:

• Electric vehicles (EVs) will pay the same Vehicle Excise Duty (VED) as internal combustion engine vehicles from 2025;
• Benefit-in-kind rates applied to EVs to remain low with yearly increases capped at 1% after 2025.

Ralph Palmer, electric fleets lead at T&E, said: “Introducing a new tax on EVs, but no new levies on polluting vehicles, is just plain wrong. Whilst EV drivers should contribute to infrastructure and maintenance through taxes, this should be accompanied by a broader shift to more effectively tax polluting cars too, particularly at the point of purchase. Not maintaining or widening the tax differential between electric and emitting cars is a massive own goal and risks stifling the progress the UK has made on electrification.”

On Benefit-in-Kind, Ralph Palmer added: “It was clear that the current BiK rates couldn’t last forever. BEV drivers will now rightly contribute slightly more, but the Treasury should have introduced bigger increases across the board, including for BEVs, while maintaining or strengthening the difference in tax levels compared to other vehicle types.”