Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment her Department has made of the potential impact of changes to Vehicle Excise Duty from April 2025 on levels of electric vehicle adoption; and what impact these changes will have on owners of zero-emission vehicles registered between 2017 and 2025 which will move from a £0 rate to the standard rate of £190-£195 per year.

Vehicle Excise Duty (VED) is a tax on vehicles used or kept on public roads. As announced by the Government at Autumn Statement 2022, from April 2025, zero emission and hybrid cars, vans and motorcycles will begin to pay VED in a similar way to petrol and diesel vehicles. Revenue from motoring taxes helps ensure we can continue to fund the vital public services and infrastructure that people and families across the UK expect.

The Policy Costings document and Tax Information and Impact Note published alongside Autumn Statement 2022 when the change was announced both estimate the impact on zero emission vehicle take-up to be ‘minimal’.

The Tax Information and Impact Note also sets out expected economic, equalities and other impacts of the changes, which can be found here: https://www.gov.uk/government/publications/introduction-of-vehicle-excise-duty-for-zero-emission-cars-vans-and-motorcycles-from-2025/introduction-of-vehicle-excise-duty-for-zero-emission-cars-vans-and-motorcycles-from-2025.

The Government is committed to supporting the transition to zero emission vehicles and announced a number of measures at Autumn Budget 2024 to support zero emission vehicle take-up. From 1 April 2025, VED First Year Rates have changed to apply higher rates to hybrid, petrol and diesel vehicles.

The Government has also maintained incentives for the purchase of zero emission vehicles within the Company Car Tax and Salary Sacrifice regimes until 2030, and extended the 100% First Year Allowances for businesses purchasing zero emission cars and installing chargepoint infrastructure.