Tuesday, July 23

UK introduces tax on electric cars

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From 2025, owners of eco-friendly cars will pay taxes on electric cars

In recent years, the demand for electric cars in developed and developing countries has continued to grow. More and more motorists are abandoning gasoline and diesel cars in favor of zero-emission vehicles. The popularity of electric cars is promoted by the general trend of concern about the environment, as well as the low cost of electricity compared with gasoline. Therefore, the number of such cars is growing rapidly around the world, both in the U.S. and in Europe. The UK decided to turn the situation to the benefit of the treasury by introducing a tax on electric cars.
The thing is that electric cars in the country are subject to a zero rate of vehicle excise tax (VED). The preferential rate is valid both during the first year after registration and afterward. Thanks to this, Britons have begun to actively switch to electric vehicles: half a million electric cars have been purchased in Great Britain since the 2010s. But at the same time, this policy has provoked a revenue deficit in the state budget of about 7 billion pounds sterling per year.

tax on electric cars

The tax on conventional fuel brings the treasury about 30 billion pounds a year, and the prevalence of eco-fuel cars negatively affects the revenue side of the budget. The British government has found a way out of this situation. The initiative lies in the fact that all owners of electric cars in the country will have to pay transport tax. The innovation will come into force in the second quarter of 2025.
According to government plans, the owners of electric cars that were registered before April 2025 will pay the lowest tax rate of 10 pounds during the first year. After that, they will switch to the standard rate, which is currently 165 pounds. It is noted that the standard tax rate will also apply to motorists who first register their electric vehicle between April 1, 2017, and March 31, 2025.
According to the chancellor, business owners will benefit from electric vehicles, as tax rates for such commercial vehicles will remain lower, unlike cars with gasoline and diesel engines. At the same time motorists, who buy cars costing from 44 thousand pounds and more, are obliged to pay the tax at a rate of 165 pounds plus 355 pounds for the expensive car every year – from the second to the sixth year of registration of the vehicle.
Besides, representatives of the government of Britain declare that from 2030 the sale of petrol and diesel cars in the country should be completely forbidden. Thus, the government intends to completely replace diesel and gasoline cars with environmentally friendly vehicles without significant losses to the treasury.

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