Electric cars due to be taxed from 2025 | Blog | Dace Motor Group

25th Nov 2022

Electric cars due to be taxed from 2025

In recent years, one of the biggest advantages of driving an electric vehicle (other than soaring fuel costs) is the fact that they are not eligible for vehicle excise duty. But Chancellor Jeremy Hunt has now confirmed in his Autumn Statement that as of 2025, electric vehicles (EV) will no longer be exempt. Instead, EV drivers will have to pay the same road tax as conventional petrol or diesel cars.

Within his statement, Mr Hunt stated “Because the OBR (Office for Budget Responsibility) forecasts half of all new vehicles will be electric by 2025, to make our motoring tax system fairer I've decided that from then, electric vehicles will no longer be exempt from vehicle excise duty."

Currently, £35bn a year is raised through a combination of vehicle excise duty and fuel duty. The Treasury has been under pressure to try and plug this gap before 2030 when the deadline for the ban of new petrol or diesel cars kicks in.

The tax increase applies to new and used electric cars

The change in VED status for electric cars will apply to both new and used cars. This means that all electric car drivers will be affected.

The amount of tax you may need to pay will depend on the registration date of your electric car.

· Drivers buying new electric cars registered after April 2025 will only pay £10 in VED for the first year. From the second year onwards, new electric cars will be subject to the standard £165 rate.

· Those driving a zero-emission car registered 1 April 2017-2025 will pay the £165 standard rate. We predict this will affect the bulk of used electric cars on the market.

· Low or zero-emission car registered between 1 March 2001 and 30 March 2017 are currently categorised as a Band A tax group. These cars will change to a Band B group and will have to pay £20 per year vehicle excise duty.

· Van drivers will also be subject to the road tax changes. Zero-emission vans will have to pay the same £290 rate as other petrol or diesel options.

There are still many reasons to buy a used electric car in 2023

We understand that electric car drivers may feel frustrated that many financial incentives are seemingly being taken away (such as the plug-in car grant).

However, we believe that there are still many reasons why you may still consider buying a used electric car in 2023.

Firstly, there are many car parks in Manchester that offer free parking for electric cars. Although only a minor incentive, if you regularly drive into the city, this could save a few pounds each month. What’s more, if and when the Manchester Clean Air Zone launches, those driving electric cars will not need to worry about any daily charges.

Another consideration is that even with rising electricity costs, the cost of charging an electric car compared to filling up a petrol or diesel engine is still lower. If you are on a renewable tariff or you are lucky enough to have solar panels on your property, you could easily charge your electric car for very little cost.

But the biggest incentive to making the switch to a used electric car is that car manufacturers are focusing all of their innovation and engineering on environmentally friendly vehicles. If you’re looking for a car with premium performance and comfortable driving levels, electric cars are likely to tick all of the boxes. What’s more, because of the increased demand, electric cars are holding their value extremely well. If you have a PCP car loan and you want to trade in your electric car to a newer model, this can be advantageous.

We sell a wide range of used electric cars

As a used car dealership group, we continually source a wide variety of used electric cars for our four dealership locations. Although petrol and diesel cars remain popular, we can see that there is a growing demand for environmentally friendly options. We don’t think this will change even with the upcoming changes to vehicle excise duty. Manchester motorists are keen to protect the environment and play their part in living sustainably, and driving a used electric car is an easy way to enhance your eco-credentials.

If you’re still unsure of the benefits of driving an electric car, why not visit one of our Manchester dealerships? Not only could you book a test drive and see how electric cars compare to combustion engines, but our trained sales staff can answer any questions that you may have. We can explain what the charging infrastructure is like around Greater Manchester and offer suggestions for which used electric car is right for you.