Fri, 21 Nov 2025

Fri, 21 Nov 2025 What taxes apply to electric vehicles and how could the Budget change that?

All new cars must be electric or hybrid from 2030, but the government could put new taxes on them.

* A new tax for electric vehicle (EV) drivers may be introduced by Chancellor Rachel Reeves in the 26 November Budget, as there is currently no equivalent to fuel duty.
* The government wants a "fairer system" for all drivers and aims to reduce greenhouse gas emissions to net zero by 2050.
* All new cars will have to be electric or hybrid from 2030, with hybrids allowed until 2035, but the EU won't ban sales of new fossil fuel-powered cars until 2035.
* Electric vehicles currently pay Vehicle Excise Duty (£10 in the first year and £195 in subsequent years), and those costing over £40,000 are subject to a "luxury car tax" of £425 per year for five years.
* The Treasury is reportedly considering introducing a "pay-per-mile" tax on EVs from 2028, which could be enforced through motorists estimating their own mileage.
* Electric vehicle sales have been growing steadily in the UK, with over 36,800 new electric cars registered in October 2025, but there are still concerns about having enough public charge points and maintaining existing vehicles.
* The government has introduced a subsidy scheme for new EVs, offering grants of up to £3,750 for eligible models priced at £37,000 or below.
* Running costs for electric vehicles can be cheaper than petrol or diesel, especially when charging at home, but prices can vary depending on the charger and location.
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