Thousands of UK drivers are set to face an additional £335 charge per year starting in 2025 due to new car tax rules being implemented. Starting next April, electric car owners will also be affected, having to pay a £190 fee as Vehicle Excise Duty (VED) is extended to zero-emission models for the first time.
HM Revenue and Customs has stated that these changes will impact individuals who own electric cars, vans, or motorcycles. However, the financial burden will not be evenly distributed, with higher costs expected for owners of light goods vehicles and vans. Zero-emission vans will now be subject to the same rate as petrol and diesel light goods vehicles, which currently stands at £335 per year. There is a possibility that this annual fee could see a slight increase before the changes take effect next spring.
According to data from EV charging specialists at ZapMap, there were approximately 65,000 electric vans in the UK by the end of July 2024. This means that a significant number of drivers will be required to pay over £300 in additional car tax annually, while over 1.19 million UK drivers will face the £190 charge applicable to electric cars.
The surge in electric van sales in the UK is evident, with an additional 20,000 electric vans registered in 2023 – marking a 21 per cent increase from the previous year. The decision to raise VED charges for zero-emission vehicle owners was originally announced in November 2022 by then-Chancellor Jeremy Hunt. Despite no plans from the Labour party to abolish the scheme, it appears that the project will proceed as planned.
HMRC has justified the implementation of these new tax rules as a means of establishing a more equitable tax system throughout the UK. A spokesperson explained that the goal is to ensure that all drivers contribute fairly to the tax system, bringing electric vehicles, which currently do not pay VED, as well as alternative fuel vehicles (AFVs) and hybrids, which receive a discounted rate, into alignment with petrol and diesel vehicles.