Electric vans will become subject to Vehicle Excise Duty (VED) from 2025, Chancellor of the Exchequer Jeremy Hunt has announced.

During today’s Autumn Statement, the Chancellor said: “Because the Office for Budget Responsibility forecast half of all new vehicles will be electric by 2025, to make our motoring tax system fairer I have decided that from then, electric vehicles will no longer be exempt from Vehicle Excise Duty.”

Budget documents published by the Treasury have confirmed that this measure will include vans, as well as cars and motorcycles.

It will see zero-emission vans moving to the rate for petrol and diesel LCVs, currently £290 a year for most vans.

Reacting to the news, Logistics UK policy director Kate Jennings said: “The removal of VED relief on vans is an unhelpful signal for millions of businesses at a time when they are being encouraged to move away from diesel. 

“Most logistics operators work on very narrow margins, with vehicle acquisition schedules planned way in advance to minimise disruption to cash flow. 

“At a time when operators are already facing increased operating costs, the additional tax imposition will create an additional burden: our sector needs more incentives to make the switch to alternative fuels, rather than barriers on the road to net zero.”

Giving a manufacturer reaction, Ford UK chairman Tim Slatter was also critical of the move, particularly with regard to commercial vehicles.

He said: “Today’s announcement by the government to impose VED for electric vehicles from 2025 is a short-sighted move. We are still many years from the ‘tipping point’ when electric vehicles will reach cost parity with petrol and diesel vehicles. Until then, we should be incentivising customers to make the greener choice. 

“This is particularly important for commercial vehicles, where take-up of electric models lags behind passenger cars. CVs are driving businesses forward to a greener future.  Home deliveries and other increases in urban CV traffic also make the switch to zero-emission vans important for air quality, health and noise benefits.”