Budget 2020: Road tax axed for all electric cars but grant cut to £3000

Published 11 March 2020

The Government has cut the plug-in car grant and abolished Premium Road Tax for electric vehicles, as part of the Budget 2020.

Previously, electric cars that cost more than £40,000 when new incurred a VED rate of £320 per year for five years in what has become known as 'premium tax'.

However, as part of the Budget 2020, the Government has added an exemption for zero emission cars from the Vehicle Excise Duty 'expensive car supplement'. As fully electric vehicles do not currently pay VED (aside from those over £40,000), it means EVs will no longer pay any road tax.

Meanwhile, there was initially some good news for EV buyers with news that the Plug-in Car Grant has - after much uncertainty - been extended to 2022-2023 with the Government pledging a further £403 million. However, following an update notice from the Department for Transport, it emerged that grant has been cut by £500 to £3000.

Both moves come after the UK put into law the requirement to reduce net greenhouse gas emissions to zero by 2050. Transport currently accounts for 28 per cent of the UK’s greenhouse gas emissions.

Earlier in March, data revealed that registrations of new electric cars surged by more than 240 per cent last month compared to the same period in 2019.

However, despite this growth, battery-electric vehicles still remain a relatively niche product with 2508 registered in February - compared to more than 48,000 petrol cars and nearly 17,500 diesels.

Comments

Jono Brain    on 11 March 2020

Electric vehicles with a list price of more than £40,000 will be exempt from Premium Tax from 1 April 2020.

Does this include vehicles bought previous to this date?

HighlanderUK    on 11 March 2020

EV's still wear & tear the road like other vehicles (even with their heavier weight), so they should pay some costs towards upkeep.....government already losing out on fuel tax that the EV owners likely paid on their former ICE car.

Otherwise in a few years, there will be more EV's, less fuel and vehicle tax monies going into the government coffers!

emmdee73    on 11 March 2020

What does the reduction in the government grant mean for anyone with a pending EV order? When does the reduction come into effect? Will purchasers be expected to cough up an extra £500?

I think I've found the answer - the grant is valid for 9 months according to https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/768517/plug-in-portal-dft-guidance.pdf

Edited by emmdee73 on 11/03/2020 at 19:32

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