Rachel Reeves’ decision not to axe controversial car tax changes just days before they launch could be “difficult to stomach” for motorists across the UK, according to experts. The Chancellor didn’t announce any updates to Vehicle Excise Duty (VED) fees in her Spring Statement meaning planned increases to petrol, diesel and electric cars will go ahead. 

Electric cars will pay VED fees for the first time from April 1, 2025 with exemptions and discounts coming to an end. However, John Cassidy, Managing Director of Sales at Close Brothers Motor Finance, has warned the move could backfire. He suggested the move would ensure there was “one less incentive” to encourage road users to adopt an EV at a time when interest in zero-emission models could be waning. 

John commented: “The decision not to reverse plans to apply Vehicle Excise Duty (VED) to electric vehicles (EVs) from April will be a difficult one to stomach for motorists.

“Private demand is not where it needs to be as the initial costs of EVs, poor charging infrastructure and concerns over electricity bills put prospective buyers off. 

“Applying VED to EVs provides one less incentive for buyers to make the switch.”

Electric car owners will pay the standard VED charge from April 1 which is set to stand at £195 from the new tax year. 

Analysis from the UK car industry found that private consumer demand had fallen to levels last seen during the pandemic with just one in 10 private buyers opting for an electric model in 2024.

John suggested the move could even have several knock-on effects with the UK’s petrol and diesel car ban also possibly under threat.

He said: “This will also make the Government’s targets, such as the Zero Emission Vehicle (ZEV) Mandate and the proposed 2030 ban on new petrol and diesel vehicles, harder to achieve.”