Driving an EV in UK all set to get costlier, subsidy to be thrown in bin

  • Electric vehicles in the UK attract significantly less tax than petrol or diesel-powered counterparts. But this is all set to change.
File photo used for representational purpose. (REUTERS)
File photo used for representational purpose.

The United Kingdom is wading through troubled economic waters and EVs or electric vehicles are likely to be sacrificed at the alter of revenue generation. The subsidy offered on battery-powered vehicles in order to make them more popular is all set to be done away with from 2025 onwards which means that buying and driving such vehicles would become costlier.

Many countries across the world have subsidies in place to quicken the pace of adoption for battery electric vehicles or BEVs. These claim to incentivize purchases of such vehicles and the UK has been offering exemption from vehicle excise duty (VED) as well. But the present financial woes of the country is a massive challenge for the government here and Chancellor (Finance Minister) Jeremy Hunt recently announced VEDs would be done away with from 2025 onwards.

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Driving an EV in the UK so far has been a much more affordable option compared to a petrol or diesel-powered car because of significantly less tax. But is it fair? "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," Hunt said.

It is a move that has not been quite well received from the British automotive industry with fears that it could stunt the growth and prospects of EVs. But it isn't as if the move comes out of the blue. The country plans to end the sales of conventional vehicles from 2030 and an unlimited tax-free or less-tax run for EVs was always going to fade. Nonetheless, what would doing away with VED mean for brands like Jaguar which plan to have an all-electric lineup, remains to be seen.

First Published Date: 18 Nov 2022, 11:54 AM IST
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