Budget 2020: Road tax axed for all electric cars but grant cut to £3000

The Government has cut the plug-in car grant and abolished Premium Road Tax for electric vehicles, as part of the Budget 2020.

Previously, electric cars that cost more than £40,000 when new incurred a VED rate of £320 per year for five years in what has become known as 'premium tax'.

However, as part of the Budget 2020, the Government has added an exemption for zero emission cars from the Vehicle Excise Duty 'expensive car supplement'. As fully electric vehicles do not currently pay VED (aside from those over £40,000), it means EVs will no longer pay any road tax.

Meanwhile, there was initially some good news for EV buyers with news that the Plug-in Car Grant has - after much uncertainty - been extended to 2022-2023 with the Government pledging a further £403 million. However, following an update notice from the Department for Transport, it emerged that grant has been cut by £500 to £3000.

Both moves come after the UK put into law the requirement to reduce net greenhouse gas emissions to zero by 2050. Transport currently accounts for 28 per cent of the UK’s greenhouse gas emissions.

Earlier in March, data revealed that registrations of new electric cars surged by more than 240 per cent last month compared to the same period in 2019.

However, despite this growth, battery-electric vehicles still remain a relatively niche product with 2508 registered in February - compared to more than 48,000 petrol cars and nearly 17,500 diesels.