Electric car tax ‘may keep more polluting cars on the road for longer’

Half of all new vehicles are expected to be electric by 2025 (Picture: Getty)

A new tax penalty for electric cars could keep older, more polluting cars on the road for longer, analysts say.

Vehicle excise duty (VED) will see drivers paying up to £145 more for using cleaner vehciels, green consultancy New AutoMotive has warned.

Electric cars are currently exempt from VED.

But Chancellor Jeremy Hunt announced recently announced that, from April 2025, new zero-emission cars will be liable for a first-year rate of £10, and an annual rate of £165 in subsequent years.

Tax relief for green cars were previously meant to incentivise take up at a time when upfront costs remain high.

Zero-emission cars registered from April 1, 2017 – which is the vast majority of all electric cars on the road – will now also be liable for the future £165 rate.

VED for cars registered before that date will continue to be based on their fuel efficiency.

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New AutoMotive calculated that 7.6 million petrol and diesel cars in that category will be liable for no more than £30 VED from April 2025.

Co-founder Ben Nelmes said: ‘These changes undermine the running cost advantages of owning an EV (electric vehicle).

‘There will be a large disparity between the VED on electric cars and on many of the more polluting cars on the road.

‘This tax penalty may cause people to continue to run older polluting cars for longer.

‘That would increase the UK’s emissions of CO2, as well as reduce lower income households’ ability to access the running cost benefits of purchasing a second hand EV from 2025.’

Mr Nelmes urged the Chancellor to ‘rethink’ his announcement and introduce a minimum level of VED for all vehicles, which ‘rises slowly’ as the number of electric vehicles grows.

Applying increases to older, more polluting cars ‘could help usher these ageing vehicles off the road’, he added.

When he announced the new rules, Mr Hunt said they will ‘make our motoring tax system fairer’ as half of all new vehicles are expected to be electric by 2025.

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