Majority of drivers back call to cut insurance tax on EVs

Three in five consumers believe the UK government should scrap Insurance Premium Tax (IPT) on electric cars.

A poll of drivers by the Green Insurer, found substantial support for the idea, which the insurer claims could help encourage electric car uptake.

Drivers currently pay 12% IPT on any insurance policy, regardless of the car’s powertrain. With EV insurance typically more expensive than that on petrol or diesel cars, the insurer argues that cutting the tax would make EVs more attractive and create an incentive for more drivers to switch.

IPT is controlled by the government and has doubled in the last decade. On top of already rising costs due to more expensive repair bills, this has helped force up insurance for drivers substantially. Estimates from Vanarama show that the average EV policy will cost more than £1,100 this year, of which more than £100 is IPT.

Paul Baxter, CEO of the Green Insurer, said: “Our research would indicate that the UK public are broadly accepting of a move to reduce insurance costs for those drivers who are opting to drive greener vehicles. We believe that such a move would align well with the government’s goals of promoting sustainability and combating climate change.

“Additionally, lower insurance costs could help make electric vehicles more affordable and further accelerate their adoption, thereby helping the UK meet its target for phasing out petrol and diesel cars.

Support for the proposal wasn’t universal, however. Among those against the idea, just over half said it would be unfair to tax EV owners less than petrol or diesel drivers. A quarter (26%) said they didn’t think the cut would make any difference to the number of people switching. And just under a fifth thought that the government could not afford the loss in income such an exemption would create.

Paul Baxter added: “We understand that some people may have concerns about any reduction in the revenue generated from Insurance Premium Tax, however we believe that this short-term action could help stimulate innovation and investment in the electric vehicle sector and longer term see technological advancements and job creation.”

To help lower your EV insurance, try following our 12 tips for cheaper premiums, or consider one of the UK’s cheapest EVs to insure.

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Matt Allan

Matt is Editor of EV Powered. He has worked in journalism for more than 20 years and been an automotive journalist for the last decade, covering every aspect of the industry, from new model reveals and reviews to consumer and driving advice. The former motoring editor of, The Scotsman and National World, Matt has watched the EV landscape transform beyond recognition over the last 10 years and developed a passion for electric vehicles and what they mean for the future of transport - from the smallest city cars to the biggest battery-powered trucks. When he’s not driving or writing about electric cars, he’s figuring out how to convert his classic VW camper to electric power.