Auto Trader raises £620 VED automobile tax invoice alarm for a number of drivers – who might be hit
Auto Trader has raised concerns over the plans for motorists in the UK that will affect one particular group
One unlucky group of drivers is set to get clobbered in April. And it might be bad news for you – and the environment as well.
Many motorists looking to go green with an electric car are set to be slapped by the luxury car tax. New rules mean they’re three times as likely to get stung compared to petrol or diesel drivers, according to fresh stats.
Auto Trader, the online car selling giant behind the research, is waving a red flag at the upcoming vehicle excise duty (VED) changes. They reckon it’ll make people less likely to want to switch to an electric car.
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From April 1, the Treasury’s axing the VED exemption for electric vehicles (EVs). Instead they will tax all EV owners with at least the standard rate, which will be £195 from the second year after you’ve bought a car.
And if you splash out on a ride registered from April 1 that costs more than £40k, brace yourself for the luxury car levy – worth £425 every year from years two to six.
That means some EV drivers could be coughing up £620 annually. Why is this happening?
Well, then-chancellor Jeremy Hunt of the Tories came up with the scheme in 2022 as he aimed to “make our motoring tax system fairer”. Labour are keeping the policy, reports Lancs Live.
Auto Trader says 56% of the electric cars up to five years old listed on their site are priced over £40,000. For those driving petrol or diesel cars of the same age, the figure drops to a mere 16%. Ian Plummer, Commercial Director at Auto Trader, believes it’s a mistake to give consumers “additional reasons not to make the switch” to electric vehicles.
He said: “Despite the more uncertain global climate, it makes sense to delay these duty increases to ward off the risk of harming attitudes towards EVs for the sake of a marginal gain in revenues for the Treasury.
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“EVs up to five years old on our site are three-and-a-half times more likely to be hit by the expensive car supplement than internal combustion engine cars in the same age range. That kind of difference is unhelpful for efforts to persuade drivers to switch.”
According to the zero-emission vehicles (Zev) mandate, each car manufacturer in the UK must ensure that at least 28% of their new cars sold this year are zero-emission, typically meaning purely electric. Last month, pure electrics held a market share of 25.3%.
Manufacturers who fail to comply with the mandate or make use of other moves – such as purchasing credits from competitor companies or boosting sales in future years – will face a penalty of £15,000 per polluting car sold above the set limits. The Government is currently reviewing its future plans.
Steve Gooding, at motoring think tank the RAC Foundation, said the “Treasury’s logic” behind bumping up the tax for vehicles over £40k is that if you’ve got the money for a flashy car, you can cough up more in tax. But he’s not convinced this stacks up when it comes to second-hand cars, which usually lose their shine (and value) more quickly.
He saoid: “The risk is that the expensive car supplement could be having an unintended and, in policy terms, perverse impact at a time when the pressure is on to promote the attractiveness of used EVs as part of the decarbonisation of motoring.”
Quentin Willson, the brains behind FairCharge and a top dog at EVUK, both cheerleaders for electric vehicles, said: “I strongly disagree with the EV expensive car supplement. Six hundred and twenty pounds a year to tax most EVs will discourage private buyers who get no incentive whatsoever to switch from combustion to electric.
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“Ministers say we should drive EVs, while the Treasury creates tax barriers to put us off. This isn’t intelligent policy making in action.”
A spokesperson for the Treasury said: “The shift to electric vehicles will support growth and productivity across the UK and is crucial for tackling climate change. “Our balanced approach ensures fiscal stability during the transition to electric vehicles, including by introducing vehicle excise duty on EVs from April 2025, while maintaining targeted incentives to encourage their uptake.”
