Labour could scrap car tax charge to save millions of drivers £400 each
Labour could scrap a car tax charge to save drivers a whopping £400 each. Mike Hawes, chief executive of the SMMT, warned more needed to be done to accelerate uptake and move motorists away from vehicles with internal combustion engines.
He said: "The application, therefore, of the 'Expensive Car Supplement' to VED on electric vehicles is the wrong measure at the wrong time. Rather than penalising EV buyers, we should be taking every step to encourage more drivers to make the switch, helping meet Government, industry and societal climate change goals."
David Borland, EY UK and Ireland Automotive Leader, said: "Given many BEVs remain relatively expensive to buy, this could in turn further de-incentivise many consumers from making the switch to a BEV." For BEVs that cost more than £40,000, drivers will have to pay the Expensive Car Supplement (ECS). This will be added to the VED rate for five years from the second year of registration. This could mean drivers would pay an additional £410 on top of the VED duty for five years.
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Affordability remains a major barrier to uptake, hence the need for compelling measures to boost demand, and not just from manufacturers. Mr Borland said: "Indeed, a reconsideration around the scale of this year’s ZEV Mandate target, and a rethink of how upcoming additional vehicle excise duty impacts BEV tax implications would be a welcome step forward for the UK’s automotive sector."
The ECS threshold has not been amended since the additional tax was introduced eight years ago. Since then, the BEV market has grown as sustainability priorities have developed. With numerous models exceeding the £40,000 limit, the introduction of VED with the ECS could impact the desirability of BEVs.
The SMMT is calling on the UK Government to raise the eligibility threshold for all-electric models. Either that or exempt them entirely from the Expensive Car Supplement. The body argues that this would send the message that EVs are essentials, not luxuries. This would ensure vehicle taxation remains fair and appropriate for today’s market conditions.