Reforming the UK’s car tax system

November 14, 2022

T&E's recommendations to reform Vehicle Excise Duty and Benefit-in-Kind in the UK

With battery electric vehicles now the fastest growing car segment, making up nearly 15% of sales, now is the time for the Treasury to lay out plans to start raising taxes on electric vehicles. All drivers should contribute to the overall infrastructure and maintenance costs, as well as the UK’s overall tax base.

 But getting the balance right is key. As part of this reform, a broader shift is needed in the UK to more effectively tax polluting cars based on their CO2 emissions. This means, as well as higher taxes on BEVs, there should be a maintaining or widening of the tax differential between electric and emitting cars. 

 T&E outlines how the UK should reform Vehicle Excise Duty and Benefit-in-Kind to start introducing higher taxes on BEVs, while maintaining or strengthening the tax incentives they have over other vehicle types.


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