Car tax changes needed to make EVs cheaper before 2030 car ban

A new report from Auto Trader found that new tax breaks are needed to ensure the uptake of electric vehicles is sustainable before the 2030 petrol and diesel vehicle sales ban. It called on the Government to unveil a “detailed programme of tax incentives” to boost ambitions for EVs and improve affordability for Britons.

The latest Road to 2030 Report found that buyer interest in electric vehicles has slumped by almost two-thirds since last year.

This is down to the increased cost of living, higher cost of borrowing, inflation rises and the massive hikes in energy prices.

There are also documented issues with the affordability and availability of electric cars, with very few new EVs being sold for less than £30,000.

On average, new EVs are 37 percent more expensive than petrol and diesel cars, with a new electric SUV costing £22,290 more than a petrol model.

Ian Plummer, commercial director of Auto Trader, warned that the UK was in danger of “veering off-track” when it comes to the 2030 internal combustion engine sales ban.

He highlighted the need for a rejuvenated tax system to incentivise drivers to opt for an electric vehicle in the near future.

Many motoring organisations welcomed Auto Trader’s Road to 2030 Report, including the British Vehicle Rental and Leasing Association (BVRLA).

The organisation has highlighted the need for more support in encouraging drivers to make the shift to an electric vehicle.

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The BVRLA also pointed out the success of the company car sector, with Benefit-in-Kind tax incentives allowing companies to pay lower tax rates when using EVs.

However, it does echo what was covered in the Auto Trader, with concerns over the used car market which has hampered the uptake of affordable EVs in the past.

Gerry Keaney, BVRLA Chief Executive, said: “Progress towards the Government’s ambitious Net Zero targets has been varied up to now, with too much growth being achieved by too few segments. 

“Supported by targeted, effective incentives, the company-provided vehicle sector is delivering decarbonisation.

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“The direction of travel there is one way. That is but one example and a raft of targeted solutions are required to bring all sectors and all drivers together on this journey.

“This timely research from Auto Trader shows that there is a genuine risk of the company-provided vehicle sector becoming an outlier, not the trailblazer it has always proven to be.”

Over half of new company cars in the UK are now electric, with many businesses and organisations benefiting from tax on the vehicles being as low as two percent.

Company car tax also heavily taxes petrol and diesel vehicles, with BiK rates as high as 37 percent for the most polluting vehicles.

Mr Keaney added: “Retail and used buyers face testing barriers that are putting them off switching to EVs, with not enough support in place to ensure their first experience of owning an electric vehicle is a positive one. 

“We know what those barriers are. Confusing communications, plus concerns over charging and cost of ownership risk thousands of drivers delaying their transition.

“Intervention is required to protect the long-term success of the market and enable a smooth transition to electric vehicles.”

He concluded, saying that the BVRLA would continue to collaborate with the industry and policy-makers to ensure drivers are protected.

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