Aftermarket February 2023

FEBRUARY 2023 AFTERMARKET 13 Left: Jeremy Hunt www.aftermarketonline.net Inevitable David Lewis, Head of Electric Vehicles and Energy at Select Car Leasing observed: “It was always inevitable that EV owners would one day have to pay VED or a similar tax so this doesn’t come as a great surprise. Road tax generates billions for the Treasury each year, and as more and more people move to EVs, that’s a large fiscal gap to plug. In my view EV road tax has been brought in at least two or three years ahead of time, as a reaction to a challenging financial outlook. While that’s disappointing on the face of it, and an embarrassing announcement to make during COP 27, I don’t ultimately see this as being a deal-breaker for those looking to get behind the wheel of an EV. “The first year VED for zero emission cars from 2025 will be set at the lowest rate - £10 - before moving to the standard rate of £165 a year. There’s also good news for company car owners, too. Jeremy Hunt has promised to keep Benefit in Kind (BIK) rates for EVs low, with a small 1% per year increase from April 2025, for three years. We know from our own data that more and more people are leasing an EV as a company car, taking advantage of low tax rates and company Salary Sacrifice schemes, so that’s a welcome step. I’d urge anyone looking to drive an EV to act now before the VED rules apply in three years’ time.” He added: “We should be incentivising EV ownership as much as we can, not giving people a reason to turn away from it. So, motorists need reminding of all the benefits of driving an EV. Even with the rising cost of electricity, you can still save hundreds of pounds on your annual fuel bill. The Benefit in Kind (BIK) tax payments for EV company cars are also temptingly low - just 2% - compared with a traditionally fuelled car. it’s also important to point out that when you lease any car, your VED is covered for the entire duration of your agreement, so it’s not a cost you need to consider. Above all else, let’s not make the introduction of road tax for EVs a reason not to go green.” Disincentivising Summing up on the application of VED to electric vehicles, NFDA Chief Executive Sue Robinson said: “The decision to introduce Vehicle Excise Duty and increase the tax burden for electric vehicles risks disincentivising families from making the transition towards more environmentally friendly vehicle types. Electric vehicles have experienced sustained and substantial growth in market share over the past decade, but there is still a way to go before the market fully matures. This is the latest in a line of reduced financial incentives to adopt electric vehicles. Strong incentives and tax exemptions are key to ensuring the UK retains a strong consumer market for electric cars. By removing these policy levers, electric vehicles become less appealing, and adoption will slow. Implementing VED for electric vehicles will create a situation where the least well-off car drivers are deterred from buying a new electric car when the time comes to replace their old one. It sends the wrong message at the wrong time.” Infrastructure On the positive side, the Chancellor also looked to safeguard infrastructure investment over the next five years, which would support the expansion of the charge point network. The government is set to extend the 100% First Year Allowance for EV chargepoints via legislation in the Spring Finance Bill to 31 March 2025 for corporation tax purposes, and 5 April 2025 for income tax purposes. Sue continued: “Infrastructure is the foundation on which the UK is built on, the £600 billion announced in spending for public infrastructure projects is incredibly positive and we look forward to seeing the full details of what this entails for projects that will improve the experience for motorists like roads and charging stations.” Meanwhile, £13.6 billion of business rate support is set to be offered over the next five years, including the freezing the multipliers, increasing relief for retail, hospitality and leisure to 75%, and reforming transitional relief on the revaluation by exchequer funding the scheme and abolishing downward caps.” Sue noted: “This will be crucial in supporting businesses as they weather the cost-of-living crisis and their long-term recovery from COVID- 19.” She concluded: “As a whole, the Autumn Budget promises growth and investment that the UK so desperately needs. Whilst there are positive notions in areas such as business rates and infrastructure investment, the removal of tax exemption for EV owners could set back the objective of electrification and increasing the number of electric vehicles sold in the UK, in a bid to reach the ever- challenging 2030 targets.” www.aftermarketonline.net “Implementation of an EV road tax to fill a shortfall in budgets is a significant own goal by the government” ”