Car tax changes launching next year come 'too soon' with warnings 'it sends a negative message'
VED is paid by every driver with rates changing depending on how much pollution the car produces
PA
Experts have urged the new Labour Government not to begin taxing electric car drivers while demand for the vehicles remains low.
One expert warned that if the Government were to go ahead with its Vehicle Excise Duty plan for electric cars, drivers would be deterred from buying one.
From April next year, owners of electric vehicles will be subject to the same car taxations as petrol and diesel models.
The move, announced by the former Chancellor of the Exchequer Jeremy Hunt in 2022, hoped to level the playing field for drivers of all fuel types.
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Electric cars are still too expensive for some drivers to consider making the switch
GETTYMarc Palmer, head of strategy and insights at Autotrader, however, has warned that the tax is coming in “too soon”.
He said: “Road tax on cars provides a substantial income to the Treasury and electric vehicles are cars after all, but it’s too soon to start taxing them at a time when consumer demand for electric vehicles is struggling.
“What we need now are more supportive reasons for people to make the switch, not more negative reasons for them not to.”
He explained that as EVs become more popular, “it’s the perfect time for them to reaffirm the UK’s commitment to the EV transition and announce positive measures”.
Sales growth of new EVs has been slowly declining this yeardespite the Government sticking with its Benefit-in-Kind and salary sacrifice schemes.
Palmer added that while new EVs have a “compelling” total cost of ownership proposition, they may still be too expensive for drivers.
He explained: “When they’re priced competitively, they sell. The same principle can be applied to used EVs, as the market matures and more cars are available to consumers at varying price points, interest is there to make the switch.
“Given that the total cost of ownership is such a key benefit to driving an EV, adding further costs – however small - sends a negative message.”
Data from Autotrader found that 34 per cent of consumers are considering an electric vehicle for their next car butneed more reasons to switch away from a petrol or diesel car.
The group stated it would like to see the new Labour Government do more to support the transition to greener vehicles.
This can be done by protecting the existing salary sacrifice and BiK incentives and offering “targeted financial incentives” on used electric cars.
Under the VED plans, electric cars registered between April 1, 2017, and March 31, 2025, will move to the 1 to 50g/km rate, which is expected to cost drivers £10 for the first year.
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EV drivers will have to start paying Vehicle Excise Duty next year
PAHowever, this will sharply increase to £190 in the second year of registration, with drivers then paying the same as some petrol and diesel owners.
Electric vehicles will also need to start paying the Expensive Car Supplement from next year.