UK’s Chancellor of the Exchequer (Finance Minister) Jeremy Hunt has announced in his Autumn Budget presentation today that EVs will no longer be exempted from the Vehicle Excise Duty (VED) that they enjoy now.

The Chancellor said this measure is being taken to make the motoring tax system 'fairer'. At present, emission-free cars and vans are exempt from both the annual £165 VED standard rate and the £335 'premium supplement' levied on new cars costing more than £40,000. The tax regime will be effected from April 2025.

According to the news agency BBC, the RAC motoring group said it does not expect the change to dampen demand for electric cars.

But others, including the Automobile Associate (AA), warned the move would reduce the incentive to switch to electric vehicles (EVs).

Hunt said company car tax rates for electric vehicles will remain lower than for traditionally fuelled vehicles.

Head of policy Nicholas Lyes at British automotive services company RAC said: "After many years of paying no car tax at all, it's probably fair the government gets owners of electric vehicles to start contributing to the upkeep of major roads from 2025.

"While vehicle excise duty rates are unlikely to be a defining reason for vehicle choice, we believe a first-year zero-VED rate benefit should have been retained as a partial incentive.