Chancellor Jeremy Hunt will impose vehicle excise duty on electric cars for the first time in this month’s autumn statement on 17 November. It could take effect from 2025-26.

Fuel Duty and VED raise £35bn for the exchequer but growing EV sales will cut this by £2.1bn by 2026-27. 15% of new vehicle registrations so far in 2022 are pure electric.

Treasury insiders indicated to the FT that imposing road tax on EVs is evidence of a “direction of travel” with more taxes due to be levied on electric cars in years to come.

“It was always a matter of when rather than if, but the timing less than ideal and counterintuitive to the green agenda,” said Auto Retail Network contributor Mike Jones.

“Maybe they think they can get away with it, given it is currently supply rather than demand constraining sales.”