Electric car tax ‘could keep more polluting cars on the road 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 longer, analysts say.

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

Electric cars are currently exempt from VED.

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

The green car tax break was previously intended to encourage adoption at a time when upfront costs remain high.

Zero-emission cars registered from 1 April 2017 – which make up the vast majority of all electric cars on the road – will now also be subject to the future £165 tariff.

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

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New AutoMotive has calculated that 7.6 million petrol and diesel cars in this class will not be liable for more than £30 VED from April 2025.

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

“There will be a big disparity between VED on electric cars and most of the dirtiest cars on the road.

“This tax penalty may incentivize people to continue using older, polluting cars for longer.

“It would increase UK CO2 emissions and reduce the ability of low-income households to access the running cost benefits of buying a used electric vehicle from 2025.”

Mr Nelmes urged the Chancellor to ‘rethink’ her announcement and introduce a minimum level of VED for all vehicles, which is ‘slowly increasing’ as the number of electric vehicles increases.

Applying increases to older, more polluting cars “could help get these aging vehicles off the road”, he added.

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

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