Electric Cars to pay VED, but not until 2025. BIK rates for EVs on the rise too

Chancellor Jeremy Hunt’s international money market appeasement includes the arrival of VED for electric cars and increases in BIK too.

Buyers of electric cars may be paying a lot more to buy their cars than buyers of ICE vehicles, but they’ve had a bit of a free ride when it comes to ongoing costs.

Even now, with electricity prices through the roof, EV owners are still paying less as they aren’t taxed on their ‘fuel’ in the way that ICE drivers are, haven’t had to pay VED and get huge BIK tax breaks if it’s a business-owned EV. 

But that was never a sustainable position as the number of EV sales continues to rise and the Treasury’s coffers are depleted, so, as Jeremy Hunt delivers a budget designed to appease money markets rather than grow the economy, EV drivers are going to have to start paying their way. A bit.

From 2025, EVs will be subject to VED at the flat rate of £165 per year after year one, and be liable for the expensive car surcharge for five years following year one at an additional £355 if the car costs over £40k. Which seems fair.

EV tax breaks for company-owned electric cars will also rise by a single percentage point each year up to a maximum of five per cent by 2027-28, but will still be massively cheaper than an equivalent ICE car

It still means EV drivers will be paying far less than ICE drivers – especially with BIK – despite protestations that these measures will curb the takeup of EVs.

Which they won’t, because we soon won’t have any choice other than to buy an EV.