Despite the proposed imposition of vehicle excise duty (VED) on zero emission cars, the government has confirmed that it will continue to provide other tax incentives to encourage the take-up of such vehicles.
In response to a question on whether revenue raised through VED would be used to fund additional infrastructure for electric vehicles, the Exchequer Secretary gave this reply:
“The Government has no plans to hypothecate revenue from VED. VED ensures motorists contribute towards general taxation. The existing arrangement of funding for charging infrastructure – through general taxation and borrowing – allows funding priorities to be more closely aligned with need, rather than depending on where revenue is raised.
Since 2020, the government has committed £2.5 billion to support the transition to electric vehicles, with £1.6 billion of this to accelerate the rollout of chargepoint infrastructure. Further, the government will be providing industry with certainty on the scale of its ambition through the introduction of a Zero Emission Vehicle Mandate from 2024 onwards. The government will also continue to incentivise lower emissions vehicles through the continuation of favourable Company Car Tax rates for electric vehicles, and capital allowances for electric vehicle charging infrastructure.”
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