EV expert calls for Government to drop 'luxury car tax', with many set to pay £410 yearly
With the Government set to end the exemption on road tax for electric vehicles in 2025, many owners could be forced to pay an expensive luxury car tax as well.
The motoring publication Auto Express has criticised the luxury car tax, warning the Government that it could discourage motorists from buying their first electric vehicle.
According to DVLA data, nearly 31 percent of vehicles in the UK are already subject to the fee, meaning owners will need to pay £410 per year in Vehicle Excise Duty (VED) for the model's first five years on the road when electric models start being charged road tax from 2025.
Paul Barker, Editor of Auto Express, suggested that the tax could also impact used car buyers who are trying to bag a bargain whilst prices are generally low.
He explained: "Regardless of the price paid for a used EV, the car will be liable if it was originally bought for more than £40,000 (the current level for the VED), and the vast majority are going to be caught up in this extra charge.
"Some used EV buyers may not even know about the extra £410 a year cost until they go to tax their vehicles. There are currently too many reasons for drivers to not make the switch, and this is yet another to add to the list."
Currently, the luxury car tax is applied to all new vehicles with a retail price of over £40,000. Whilst this is a high-end budget for petrol cars, the overall higher cost of electric vehicles means most of the popular models fall into this bracket.
For example, Telsa, one of the best-selling electric car brands in the UK, only has one model that falls short of the tax, whereas the likes of Ford and Toyota have none.
The Society of Motor Manufacturers and Traders (SMMT) have called on the Government to remove the tax, highlighting that sales of electric vehicles fell by 11 percent during June 2024.
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Paul stood with the SMMT in calling for the removal of tax, encouraging the Government to add incentives to make buying an electric car more affordable.
He advised: "private and used vehicle uptake of EVs is not yet in a position to start adding cost barriers; more needs to be done to encourage drivers to move to this still-fledgling technology, not to give another reason to hold off from making the shift.
"We therefore echo the SMMT's call to remove this punitive tax that will impact the uptake of electric vehicles and provide additional cost likely to dissuade consumers from the very vehicles the Government wants them to adopt."
Previously, the Government has imposed a number of incentives to help motorists make the switch from a petrol or diesel car to an all-electric model.
Until June 2022, motorists could receive a grant of up to £5,000 towards any electric car or plug-in hybrid costing less than £40,000.
EV owners also currently benefit from free road tax and an exemption to congestion charge in London, however both incentives are due to be scrapped during 2025.
