Electric Vehicles: Excise Duties
The question
To ask the Chancellor of the Exchequer, what assessment she has made of the potential impact of the new taxation of electric vehicles on reaching the UK's net zero targets.
Answered by Dan Tomlinson
The Government intends to create a fair tax system whilst ensuring that driving an electric vehicle (EV) remains an attractive choice for consumers; the transition to EVs is essential to meeting Net Zero targets.
As announced at Budget 2025, the Government is introducing Electric Vehicle Excise Duty (eVED) from April 2028. The rate of eVED for EVs will be half of the equivalent fuel duty rate paid by the average petrol/diesel driver, ensuring that EVs are cheaper to own and run for the majority of EV drivers. The Government is also providing generous additional support to incentivise the use of electric vehicles, including £1.3 billion of additional funding for the Electric Car Grant (ECG) and increasing the VED Expensive Car Supplement (ECS) threshold to £50,000 for EVs.
As set out by the OBR, the estimated net impact of eVED and other Budget measures, including the ECG and ECS, is 120,000 fewer new EV sales across the forecast period. This is against a baseline which assumes EV sales more than triple from 2025-26 levels by 2030-31, which means the net impact of eVED represents only 2% of total new EV sales in the period.
The Government has set out expected impacts from eVED and other Budget measures in the Budget 2025 Policy Costings document at GOV.UK: https://assets.publishing.service.gov.uk/media/692872fd2a37784b16ecf676/Budget_2025-Policy_Costings.pdf
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