The UK Government delivered its Autumn Statement 2022 on 17 November 2022, announcing a number of tax changes that would affect motorists in the years ahead.
One of the biggest announcements was that electric vehicles would lose their Vehicle Excise Duty (VED) exemption from April 2025. The Autumn Statement also included changes to company car tax, hybrid vehicle taxation and tax allowances for electric vehicle charging points.
While many of the measures were not due to take effect immediately, the Autumn Statement 2022 gave motorists and businesses an early indication of how vehicle taxation was going to change.
Perhaps the most significant announcement for motorists was the decision to introduce VED for electric cars, vans and motorcycles from April 2025.
At the time of the Autumn Statement 2022, zero-emission vehicles were exempt from VED. The government announced that this exemption would end as electric vehicle ownership continued to increase.
New zero-emission cars registered from 1 April 2025 were announced as being subject to the lowest first-year VED rate, which was £10 at the time. From the second year, they would move to the standard rate, which was £165 when the policy was announced.
The change also applied to existing zero-emission cars first registered between 1 April 2017 and 31 March 2025. These vehicles would move onto the standard VED rate from April 2025. GOV.UK
The policy was subsequently introduced as planned, meaning electric vehicles are no longer exempt from vehicle tax.
For motorists considering an electric vehicle, the announcement therefore represented an important future change to the overall cost of ownership.
The Autumn Statement 2022 also announced that the exemption from the Expensive Car Supplement for electric vehicles would end in 2025.
At the time, the supplement applied to cars with a list price exceeding £40,000 and was charged for five years. The rate was £355 per year on top of the standard VED rate.
From April 2025, eligible new zero-emission cars would also become subject to the supplement.
This meant that buying an expensive electric car would no longer provide an exemption from this additional vehicle tax.
The rules have since changed again, including changes to the threshold and rates, so the figures above should be viewed in the context of the original 2022 announcement rather than as current VED rates.
The Autumn Statement 2022 also announced changes affecting hybrid and other alternatively fuelled vehicles.
At the time, alternative-fuel vehicles, including hybrids, benefited from a £10 annual VED discount compared with petrol and diesel vehicles.
The government announced that this discount would be removed, bringing alternative-fuelled vehicles and hybrids more closely into line with conventional vehicles for VED purposes.
This was another indication that the government’s approach to vehicle taxation was moving away from separate tax treatment based simply on a vehicle’s fuel type.
The Autumn Statement 2022 also included changes to Benefit in Kind (BiK) rates for company cars.
Company car tax rates for electric vehicles and other low-emission vehicles were set to increase by one percentage point for the 2025/26 tax year, followed by further one-percentage-point increases in 2026/27 and 2027/28.
The government said that the increases would provide longer-term certainty while continuing to offer an incentive for employees and businesses to choose electric and low-emission vehicles.
For zero-emission cars, the increases were limited to one percentage point each year. Rates for other company cars were also adjusted, with the highest appropriate percentage eventually reaching 37%.
This meant electric company cars would remain considerably more tax-efficient than many petrol and diesel alternatives, even though the tax advantage would gradually reduce.
The changes announced in the Autumn Statement 2022 also affected electric vans.
The government announced that zero-emission vans would eventually be brought into the same VED system as petrol and diesel light goods vehicles.
This was part of the wider policy to ensure that as more vehicles moved to electric power, they would still contribute to vehicle taxation.
The changes were not intended to remove the environmental benefits of electric vans, but they did mean that the tax advantage associated with having a zero-emission vehicle would gradually become smaller.
There was some positive news for businesses and people investing in electric vehicle infrastructure.
The government announced an extension to the 100% First Year Allowance for electric vehicle charge points.
The original Autumn Statement 2022 announcement extended the allowance for corporation tax purposes until 31 March 2025 and for income tax purposes until 5 April 2025.
This was designed to encourage businesses and other taxpayers to invest in charging infrastructure.
Importantly, these dates did not ultimately represent the final end of the tax relief. The government subsequently extended first-year allowances for zero-emission cars and electric vehicle chargepoints further, including to 31 March 2027 for Corporation Tax and 5 April 2027 for Income Tax.
The Autumn Statement 2022 marked an important change in the government’s approach to vehicle taxation.
For several years, electric vehicles had benefited from exemptions and tax incentives designed to encourage their adoption. However, as electric vehicle ownership increased, the government began preparing for a future in which they would make a larger contribution to the tax system.
The announcement that electric vehicles would begin paying VED from April 2025 was therefore particularly significant.
For company car drivers, electric vehicles continued to have a tax advantage, although the government announced that the gap would gradually narrow through changes to BiK rates.
Hybrid vehicles also lost some of their preferential treatment, while businesses investing in charging infrastructure continued to benefit from tax allowances.
For someone considering an electric car in 2022, the Autumn Statement 2022 meant that the long-term running-cost advantage of an EV needed to be considered more carefully.
Electric vehicles could still offer lower energy and maintenance costs than many petrol or diesel cars, but VED would eventually become another ownership cost.
The announcement was particularly relevant to anyone planning to keep an electric car for several years, as the tax changes were designed to affect both new and existing zero-emission vehicles from April 2025.
The wider cost of ownership therefore became increasingly important when comparing electric, petrol, diesel and hybrid vehicles.
Our guide to petrol vs diesel vs electric looks at the wider differences between these powertrains, including running costs, practicality and emissions.
The main VED announcement did eventually become law.
From 1 April 2025, electric and other zero-emission cars, vans and motorcycles became subject to VED. This included both new and existing vehicles that had previously benefited from the exemption.
The original £10 first-year rate and £165 standard rate mentioned in the 2022 announcement were the rates applicable when the policy was announced. VED rates have since increased, so they should not be used as current tax figures.
The Expensive Car Supplement exemption for electric vehicles also ended as planned, although the relevant thresholds and rates have since changed.
This makes the Autumn Statement 2022 important as a record of when these changes were announced, rather than as a source for today’s vehicle tax rates.
The Autumn Statement 2022 was significant for motorists because it set out a major future change to vehicle taxation.
The decision to introduce VED for electric vehicles from April 2025 marked the beginning of the end of their long-standing vehicle-tax exemption. At the same time, changes to company car tax continued to encourage the use of electric vehicles while gradually reducing their tax advantage.
Hybrid vehicles also lost some preferential treatment, while businesses continued to receive incentives for investing in electric vehicle charging infrastructure.
Although the tax rates announced in 2022 have since changed, the Autumn Statement 2022 remains an important milestone in the UK’s transition towards a vehicle taxation system in which electric vehicles also contribute to road-related taxation.
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