UK Introduces New Car Tax for Electric Vehicles
UK Introduces New Car Tax for Electric Vehicles

UK Introduces New Car Tax for Electric Vehicles

News summary

Starting April 2025, electric vehicles (EVs) priced over £40,000 will be subject to a new Vehicle Excise Duty (VED) called the 'expensive car supplement,' costing owners an additional £425 annually for five years. This change, which affects approximately 70% of new EVs, is expected to deter families and businesses from switching to electric due to the high ownership costs, particularly for models like the Kia Niro EV and Volkswagen ID.3. In addition to this new tax, all EV owners will also pay standard VED for the first time, starting at £10 in the first year and then £195 annually. Older petrol and diesel vehicles will face increased VED rates, with some new models seeing their first-year tax double, while classic cars made before 1984 remain exempt from these charges. Industry groups are urging Chancellor Rachel Reeves to reconsider the luxury tax on EVs, as it contradicts the UK’s net-zero goals and could impact the car industry's transition to electrification. The changes come amid rising concerns about how the automotive sector will adapt to the anticipated shift away from combustion-engine vehicles by 2030.

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