Electric Vehicles To Pay Road Fund Licence From April 2025 - Autumn Budget 2022
Today the Government announced their Autumn Budget with a range of changes being implemented as the country experiences the current cost-of-living crisis. One of the changes being introduced is that of Electric Vehicle (EV) owners having to pay Road Fund Licence (RFL) from April 2025. Road Fund Licence/Vehicle Excise Duty, or 'Road Tax' as it is colloquially known as, is a Government tax on all vehicles on our roads. Back "in the day", RFL was displayed using a small circular tax disc on the vehicle's windscreen, but nowadays it is all done online. The amount paid is calculated based on the CO2 emissions of the vehicle and the vehicle's value. The Department for Transport are allocated a budget by the Exchequer from the revenue collected from RFL and are responsible for deciding on where that money goes. Typically, it is spent of things such as pot hole repair and highway maintenance.
No RFL for EVs - a big selling point
Prior to the announcement of today's budget and the impending changes to RFL for EVs, owners of electric vehicles were afforded the benefit of paying no RFL due to the vehicles producing zero emissions. With the UK Government gunning towards Net Zero carbon emissions by 2030, offering drivers the opportunity to save money on RFL was a great incentive to switch from a traditional combustion engine, thus reducing the country's CO2 emissions. The Government benefitted by seeing an uplift in the number of EVs on our roads, and the drivers benefitted by saving money... everyone was winning.
Typically, EVs cost more money than a combustion engine vehicle. Drivers weighing up the pros and cons of the highest costs often considered the lower running costs due to fuel savings and the savings from no RFL. The majority of cars on UK roads pay an average of £165 a year in RFL.
From April 2025 - paying RFL
It has yet to be confirmed exactly how the Government plan on calculating the amount of RFL that EV drivers will have to pay; as mentioned above, the current calculation method is centred around the vehicle's CO2 emissions. With EVs producing zero CO2, it is clear that an alternative method of calculation will be required. It is understood that drivers of electric vehicles will have to pay £165 per year.
Critics of the announcement have been quick the highlight the hypocrisy from the Government: pushing drivers towards electric vehicles for the benefit of a tax relief to then U-turn and introduce a tax. Some have gone further, stating that the rise in energy prices have closed the gap between the cost of running an EV and the cost of filling up with petrol. In a time where electric is not far off the cost of petrol and now the scrapping of RFL, those who were considering switching to EV may now decide against it.
What do drivers think?
Pendle Lease conducted a survey asking followers of our Instagram page (@pendlelease) whether or not they think drivers of EV should pay RFL.