Road tax hikes up to 6% in 2024 as UK inflation rates still above 2% target. Is it time to consider the switch to electric?

As of Monday, April 1^st, 2024, motorists in the UK have seen their road tax (VED) increase by up to 6%. Chancellor Jeremy Hunt extended the fuel duty cut in the spring budget saving drivers £50 this year, but road tax sees an increase in line with inflation leading to some motorists having their tax increase by up to £600.  

So how will this affect you as a driver? The increase will affect those who drive petrol, diesel, and hybrid vehicles. Those that are exempt from road tax and the increases are historic vehicles made before 1983, mobility vehicles that meet the requirements set out on the gov.uk website, vehicles used by disabled persons where you can apply for an exemption, vehicles registered as SORN, vehicles for agriculture and electric vehicles.  

Current plans are to cease the sale of petrol, diesel, and hybrid vehicles in the UK by the year 2035, meaning high CO2 emissions will be a thing of the past. Those who switch to drive hybrid vehicles can benefit from reduced road tax rates and those who drive electric vehicles don’t pay road tax at all for the time being. But this is set to change in 2025 when electric vehicles will also be charged road tax. Unfortunately, with the average cost of a brand-new electric vehicle in the UK costing £50,000 as revealed by NimbleFins, this means a premium will also be taxed known as ‘Expensive Car Supplement’ costing over £400 additionally.  

Is it enough of an incentive for the residents of the UK to want to make the switch before 2035 in time to hit that target, when charging your vehicle at home has unavoidably been impacted by fluctuating energy prices over the past couple of years. The office of national statistics published in February of this year that 41% of adults are already struggling to afford their energy payments. Charging your vehicle at home has some benefits and you could be subject to a reduced 5% VAT rate. However, if you live in terraced housing or if you don’t have access to a private parking space then building regulations will not allow you to install an at-home charger and you will have to charge your vehicle at a public charger. Without the option to charge your vehicle at home it means you will be subject to VAT charged at the standard rate of 20% as opposed to a reduced rate of 5%.  

When it comes down to finances it seems like much of the population experience uncertainty and stress around their finances and so the thought of getting a new vehicle may seem intimidating and the uncertainty of the cost changes when switching to electric. However, in 2023, Citizens Advice recorded that over 1 in 5 of their debt issues were related to fuel debt so is there actually a better choice? Whilst it may seem appealing to not change the car you have it may be costing you more. Switching your vehicle to electric on the used car market also costs significantly less.  

At Zuto, as of April 2024 the average price of an electric vehicle was £24,500 meaning that the average used electric vehicle would not be affected by a premium road tax charge which would save you £400 annually, and from 2025 would cost £165 for road tax a year as opposed to the flat rate of £190 for petrol and diesel cars manufactured after 2017 now. There are also further savings to be made when it comes to fuel where on average it costs £500 less a year to run an electric car. There are many other pros for switching to an electric vehicle as they are also exempt from clean air zone charges, cost less to maintain and are quieter. 

It is expected for the cost of electric vehicles to reduce as they gain popularity and with further education and information made available, we can all drive towards a greener future. If you are unsure on deciding between switching to a hybrid vehicle or a fully electric then you can check out our other blog here where you can find the pros and cons of both. You can get a free no obligation quote with Zuto today and make the switch to an electric vehicle, with over 900 available to spread the cost at Zuto.