Warning issued to anyone who leases car over new tax from April

Under the new Labour Party government, VED bands are being dramatically shaken up this year
-Credit:Reach Publishing Services Limited


A warning has been issued to anyone who leases their car over new Vehicle Excise Duty and car tax rates from April this year. Under the new Labour Party government, VED bands are being dramatically shaken up this year.

Lincoln Vehicle Solutions warned motorists thinking of leasing a vehicle will be “affected” by the new Vehicle Excise Duty (VED) rules from April. Lincoln Vehicle Solutions said: “If you’re considering leasing a new car, whatever the fuel type, the new 2025 will affect you if the car is delivered after the 1st April 2025.

“Contract Hire includes the cost of Road Tax for the duration of the agreement, therefore the lease costs will increase in line with the VED changes for the vehicle.” Statistics reveal that over 1.6 million people in the UK now lease a car.

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Roughly this means that between 20 per cent and 30 per cent of new cars are leased in the UK, versus being purchased. Car leasing is like renting and is the alternative to buying, with leasing you're paying a monthly fee instead of an overall and expensive price for a vehicle.

Carparison, a leading vehicle leasing service, said: “Road tax on a contract hire car is administered entirely by the funder of your lease deal as they are the registered keeper of the vehicle. Therefore, no action is required from yourself regarding taxing your new vehicle as it is all taken care of by them ahead of delivery.

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“On the rare occasion that a road tax increase applicable to your lease vehicle occurs after your lease rates are agreed and during your term, you will be liable for this uplift." It added: "Your funder will contact you directly if this occurs.

“For example, if road tax costs increase by £5 per annum on your vehicle, your funder will contact you to arrange payment for this difference.” EVs have risen in popularity as well and despite the cost-of-living crisis data shows a 32% increase in enquiries for electric vehicles in Q1 2023 compared to Q4 2022.