UK Electric Car Tax Exemptions to End, Introducing Higher Costs for EV Owners

Starting April 1, electric vehicles will no longer be exempt from vehicle excise duty, with new luxury car tax rules disproportionately affecting EV buyers.

• From April 1, electric vehicles (EVs) will lose their vehicle excise duty (VED) exemption, requiring first-year payments of £10 and £195 annually thereafter.
• EVs priced above £40,000 will also face a luxury car tax of £425 annually for years two through six after registration.
• The cost of manufacturing EV batteries often makes EVs more expensive than petrol or diesel cars, leaving EV buyers three times more likely to be hit by the luxury car tax.
• Critics argue the changes could deter the switch to electric vehicles, undermining efforts to promote EV adoption and decarbonize transportation.
• The policy, introduced in 2022 by then-Chancellor Jeremy Hunt and continued by the Labour government, aims to create a 'fairer' tax system but has sparked calls for delay or reconsideration.

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