Calls for end to major car tax policy as one group of drivers set to 'pay more'
Certain motorists could be caught out by controversial car tax fees as calls mount to see charges scrapped.
Experts have demanded an end to a major new car tax fee with one set of motorists massively impacted.
Electric car owners are being forced to pay extra VAT when charging their vehicle in public in a major blow to road users with no off-street parking.
Those plugging up on their driveways pay just five percent VAT compared to 20 percent for those topping up on the street or at a parking bay.
There have been previous calls for the 20 percent fee to be reduced so all drivers pay a five percent rate regardless of where they charge.
But specialists at NewAutomotive have now demanded the Government begin “implementing ways to reduce the rate of VAT” over the next two years.
They have called out the unfairness of the charge in their latest Vehicle Taxation: The Next 25 Years' study, which was released earlier this week.
The study said: "Without a slump in electricity prices, huge easements in connection fees and standing charges, alongside a willingness on the part of charge point operators to push back break-even points, it is difficult to envisage how Government will persuade car owners without access to home charging to pay more and switch when the chief attraction towards EVs for everyone else is to pay less.”
NewAutomotive has predicted the Treasury could be set for an extra £6.7billion per year in revenue by 2050 if the policy remains in place.
Cutting VAT fees from 20 percent to five percent would mean revenues fall to just £2.1bilion, losing a staggering £4.6billion in the process.
But they warned that simply cutting VAT rates was not the only way around the controversial fee.
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NewAutomotive added: "If however this is an act of forbearance too far, there is an alternative, which is to fund a uniform rate of five percent VAT through increases in Vehicle Excise Duty, pooling the costs across all motorists."
Earlier this year, the Government suggested there were no plans to look into changing electric car charging VAT rates.
They explained: "VAT is a broad-based tax on consumption and the 20 percent standard rate applies to most goods and services. Whilst there are exceptions to the standard rate, these have always been limited by both legal and fiscal considerations.
"Expanding the VAT relief already available would impose additional pressure on the public finances to which VAT makes a significant contribution."
