Petrol and diesel car tax rates ‘will have to change in the future’ after Budget omission

Budget 2021: Sunak outlines measures to alleviate HGV crisis

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WhatCar? Editor Steve Huntingford said the Government will have to soon “address” tax rates which will have an impact on petrol and diesel owners. He said the Treasury was facing an “increasing hole on its budget” as more drivers opt for electric cars which are still exempt from payments.

Mr Huntingford said: “Something the Chancellor failed to touch on is how Vehicle Excise Duty for cars and vans will have to change in the future.

“With electric vehicles the fastest growing new car segment, the Treasury is facing an increasing hole in its budget due to the currently tax-exempt electric vehicles.

“This is something the Government will need to address fast, as the 2030 deadline to end the sale of petrol and diesel cars is looming closer.”

However, despite the Government hosting the COP26 climate meeting in Glasgow next week, the Chancellor failed to include any further promises on electric cars.

There have been multiple calls for the Chancellor to update the tax system to include electric vehicles to fill a £40billion black hole created by a loss of fuel duty and VED.

Previous research by What Car? found 70 percent of current drivers already want electric cars to pay road tax.

They said more than a third of respondents were in favour of replacing VED with a flat tax equal across all vehicles.

Respondents said they wanted any flat-rate tax system to include electric cars in the future.

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Last month, the Tony Blair Institute said there was “real urgency” to introduce tax changes in the UK.

He warned drivers will continue to purchase electric cars “on the assumption” they will always be cheap to run.

He warned it would then cause “political problems” to introduce charges at a later date.

The House of Commons Transport Select Committee is understood to be taking oral evidence from stakeholders on a possible road pricing system this Autumn.

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