Motorists given warning ahead of new car tax rule changes

Electric vehicle drivers have just over two weeks to prepare before a major tax change comes into effect.

From Tuesday April 1, owners of EVs will no longer be exempt from paying vehicle excise duty (VED), a tax which hits everyone with a car.

The change means they will have to shell out £10 for the first year after their vehicle is registered, and then the standard rate of £195 each subsequent year of ownership.

Then-Chancellor Jeremy Hunt announced the move in December 2022, saying it would ‘make our motoring tax system fairer’.

His policy has been continued by the current Labour government.

But driver groups have warned that another change coming on April 1 could have an even greater impact on EV owners – and discourage people from buying them in the first place.

The luxury car tax is a supplement added to VED for people whose vehicles have a list price of £40,000 or more.

This, too, will apply to electric vehicles from the beginning of next month.

Due to the expense of manufacturing batteries, EVs are often more expensive than their internal combustion counterparts – meaning their owners are more likely to be slapped with the luxury car tax.

Online vehicle marketplace Auto Trader has called for the VED changes to be delayed out of concern it may prevent people going electric.

The site’s commercial director Ian Plummer said: ‘EVs up to five years old on our site are three-and-a-half times more likely to be hit by the expensive car supplement than internal combustion engine cars in the same age range.

‘That kind of difference is unhelpful for efforts to persuade drivers to switch.’

From April 1, owners of these ‘luxury cars’ will pay a supplement of £425 on top of the standard rate for years two to six after a vehicle is first registered.

It will apply to new EVs registered from that date.

Former Fifth Gear presenter Quentin Willson, who is the founder of pro-EV group FairCharge, said: ‘I strongly disagree with the EV expensive car supplement.

‘Six hundred and twenty pounds a year to tax most EVs will discourage private buyers who get no incentive whatsoever to switch from combustion to electric.

‘Ministers say we should drive EVs, while the Treasury creates tax barriers to put us off.’

A Treasury spokesperson said: ‘The shift to electric vehicles will support growth and productivity across the UK and is crucial for tackling climate change.

‘Our balanced approach ensures fiscal stability during the transition to electric vehicles, including by introducing vehicle excise duty on EVs from April 2025, while maintaining targeted incentives to encourage their uptake.’

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