EV's to pay Road Tax from April 2025

[thewishy]

So, had a reasonable amount of time to consider things

On the VED for existing cars. The policy isn't great
- They don't tend to retrospectively change VED, so that people can make decisions to spend more low emission vehicles knowing that ongoing costs were lower. This was true for ICE last decade, and EVs this decade.
- Other cars which are considerably more polluting are low or zero VED. On one hand, these are now likely to be driven by those with less money to spare, but it feels wrong to re-evaluate EVs without re-evaluating older ICE vehicles. Plus EV owners are likely to be caught more with income tax increases (Broadest shoulders, I don't actually have an issue with this)

The expensive car supplement on VED on new cars from 2025 is considerably more problematic.
- The expensive car supplement was supposed to catch luxury vehicles, cars in general have increased in price dramatically since the pandemic
- 40k for an ICE is still a somewhat premium car. EVs are simply more expensive, and need a higher allowance
- The hard limit also makes limited sense, and reduces the inventive to buy a more efficient EV. For example skip a heatpump, and you can fit under the expensive car allowance. Not incentivising efficiency will (in the medium term) increase demand on EV chargers and the grid and increase CO2 emissions.
- Some cars have hybrid models which won't attract the luxury vehicle tax, but have an EV version which will. To me, that's utterly perverse

To be clear, I'm not saying a Q8 eTron or Ferrari shouldn't pay the supplement. I'm not even sure a Tesla should be exempt (Although would argue that they have class leading efficiency). But the change to the system makes EV buyers less sure, and in 2025 it will actively disincentive purchasing EVs over Hybrids. There is, of course, plenty of time for this to be revised, and I think it unlikely that a conservative government is actually in power to implement this come 2025

 

[Jason71]

So, had a reasonable amount of time to consider things

On the VED for existing cars. The policy isn't great
- They don't tend to retrospectively change VED, so that people can make decisions to spend more low emission vehicles knowing that ongoing costs were lower. This was true for ICE last decade, and EVs this decade.
- Other cars which are considerably more polluting are low or zero VED. On one hand, these are now likely to be driven by those with less money to spare, but it feels wrong to re-evaluate EVs without re-evaluating older ICE vehicles. Plus EV owners are likely to be caught more with income tax increases (Broadest shoulders, I don't actually have an issue with this)

The expensive car supplement on VED on new cars from 2025 is considerably more problematic.
- The expensive car supplement was supposed to catch luxury vehicles, cars in general have increased in price dramatically since the pandemic
- 40k for an ICE is still a somewhat premium car. EVs are simply more expensive, and need a higher allowance
- The hard limit also makes limited sense, and reduces the inventive to buy a more efficient EV. For example skip a heatpump, and you can fit under the expensive car allowance. Not incentivising efficiency will (in the medium term) increase demand on EV chargers and the grid and increase CO2 emissions.
- Some cars have hybrid models which won't attract the luxury vehicle tax, but have an EV version which will. To me, that's utterly perverse

To be clear, I'm not saying a Q8 eTron or Ferrari shouldn't pay the supplement. I'm not even sure a Tesla should be exempt (Although would argue that they have class leading efficiency). But the change to the system makes EV buyers less sure, and in 2025 it will actively disincentive purchasing EVs over Hybrids. There is, of course, plenty of time for this to be revised, and I think it unlikely that a conservative government is actually in power to implement this come 2025

Most taxes are progressive and those who can pay more have to. Its just the way of the world and I would argue has to be so due to the way income and wealth is distributed. So a tax related to the value of the car makes some sense though I might argue we already have one and its called VAT. So I am not sold on the idea that an ongoing tax related to the value of something I bought years ago makes sense but that is kind of how council tax works so i'll let that go for now
BUT
What I object to is flat taxes. We have a threshold for higher rate income tax but we don't say right anyone who earns over that limit has to pay an extra £10,000 in tax irrespective of how much they earn over that limit.
The only other example of a flat tax like this that comes to mind was the 3% stamp duty threshold ( is it still a thing? I haven't moved recently) and that was dumb and market distorting as well
Every car already has an official list price which HMRC and The DVLA has so its not like they don't have the necessary data to make this a variable tax based on value if they wanted to.

 

[khyros]

Most taxes are progressive and those who can pay more have to. Its just the way of the world and I would argue has to be so due to the way income and wealth is distributed. So a tax related to the value of the car makes some sense though I might argue we already have one and its called VAT. So I am not sold on the idea that an ongoing tax related to the value of something I bought years ago makes sense but that is kind of how council tax works so i'll let that go for now
BUT
What I object to is flat taxes. We have a threshold for higher rate income tax but we don't say right anyone who earns over that limit has to pay an extra £10,000 in tax irrespective of how much they earn over that limit.
The only other example of a flat tax like this that comes to mind was the 3% stamp duty threshold ( is it still a thing? I haven't moved recently) and that was dumb and market distorting as well
Every car already has an official list price which HMRC and The DVLA has so its not like they don't have the necessary data to make this a variable tax based on value if they wanted to.

but all cars pay VAT. VAT is a percentage of price. Why not increase the VAT of luxury cars and pay an actual road tax to contribute to roads in your area?
I think the whole concept of VED in two bands 1st year and 2nd year, with all cars essentially paying the same rate from year 2, but hten having another tier on top for "luxury" (LOL!) cars is just plain awkward and silly.

 

[Dilly]

I still reckon the government would tax electricity generation at some point, though. Are there any examples of people creating value without it being taxed?

Oh God! Will I get hit by windfall tax if we have another summer like this year

 

[greenbottle123]

See post #9 above - EV's to pay Road Tax from April 2025

This is my point, according to the AUTUMN STATEMENT 2022 PDF
• the Expensive Car Supplement exemption for electric vehicles is due to end in 2025. New zero emission cars registered on or after 1 April 2025 will therefore be liable for the expensive car supplement. The Expensive Car Supplement currently applies to cars with a list price exceeding £40,000 for 5 years

If I have understood this correctly... if the exception runs out then Tesla owners will fall under the surcharge bracket, additionally and conflictingly that would mean the surcharge doesnt kick in until 2027? so for two years tax is expected to be at the standard rate?

 

[WllXM]

This is my point, according to the AUTUMN STATEMENT 2022 PDF
• the Expensive Car Supplement exemption for electric vehicles is due to end in 2025. New zero emission cars registered on or after 1 April 2025 will therefore be liable for the expensive car supplement. The Expensive Car Supplement currently applies to cars with a list price exceeding £40,000 for 5 years

If I have understood this correctly... if the exception runs out then Tesla owners will fall under the surcharge bracket, additionally and conflictingly that would mean the surcharge doesnt kick in until 2027? so for two years tax is expected to be at the standard rate?

It's not 'for 5 years' as in from now.
It means you are paying the surcharge for 5 consecutive years from the first reg date.

So as it will kick in in 2025, if you purchase a new Tesla from April 25, you'll end up paying VED+EC Supplement every year until 2030, then VED only

 

[raymondotango]

It's not 'for 5 years' as in from now.
It means you are paying the surcharge for 5 consecutive years from the first reg date.

So as it will kick in in 2025, if you purchase a new Tesla from April 25, you'll end up paying VED+EC Supplement every year until 2030, then VED only

It's from Year 2 of owning a new car from 2025. So if you buy a car in April 25, your first luxury car supplement payment will be in 2026.

 

[robbieduncan]

Are there any examples of people creating value without it being taxed?

I would draw a separation between people creating value for their own direct use and those doing so to sell it. There is no taxation on growing your own food for your own consumption but if you start selling it…

 

[greenbottle123]

It's not 'for 5 years' as in from now.
It means you are paying the surcharge for 5 consecutive years from the first reg date.

So as it will kick in in 2025, if you purchase a new Tesla from April 25, you'll end up paying VED+EC Supplement every year until 2030, then VED only

Okay, by the sounds of it existing owners are saved from this excess tax. I mean to be frank I dont drive much after the pandemic so paying a surcharge will be great, not exactly rushing off to WBAC but that is always an option for later and seeing what the latest offers are then.

 

[26ct2143]

I would draw a separation between people creating value for their own direct use and those doing so to sell it. There is no taxation on growing your own food for your own consumption but if you start selling it…

I make my own electric onsite, on the farm, but when this electric goes to the farmhouse, I have to pay tax on it (as a benefit).
But anyway, I think this tax could easily put off EV adoption for the cheaper 2nd hand market, because it makes them look less attractive than a £0 tax diesel.

 

[greenbottle123]

Any chance of a sub-£40k car from Tesla soon? A model 2?

 

[candida]

Any chance of a sub-£40k car from Tesla soon? A model 2?

Given that a base Honda e is now almost almost £37k, I cant see Tesla pricing a model 2 at under £40k even if it came out tomorrow

 

[K3v1n]

Also to be fair a Tesla is a £40k+ car if your buying a car for that kind of money paying the tax isnt an issue is a few hundred a year, the issue is we all got used to paying £0. Looking forward to Teslas order list in 2024 its gonna be full! to get it in pre tax!

 

[robbieduncan]

I make my own electric onsite, on the farm, but when this electric goes to the farmhouse, I have to pay tax on it (as a benefit).
But anyway, I think this tax could easily put off EV adoption for the cheaper 2nd hand market, because it makes them look less attractive than a £0 tax diesel.

There won't be any £0 tax anythings (apart from very old cars): everything in Band A is going up to at least Band B too

 

[greenbottle123]

Also to be fair a Tesla is a £40k+ car if your buying a car for that kind of money paying the tax isnt an issue is a few hundred a year, the issue is we all got used to paying £0. Looking forward to Teslas order list in 2024 its gonna be full! to get it in pre tax!

Could this mean more resell value for current models!

 

[qwickshot]

It’s the £40k threshold that is the issue, it hasn’t moved since it was introduced 5 years ago and inflation has slowly been dropping it down in real terms. The last year has seen the threshold drop dramatically in real terms.

Even a lot of ‘run of the mill’ cars are now falling into it. Can you even get a true 6/7 seater under £40k these days?

You can’t get 3 child seats in a regular 5 seat car these days. They are much larger and thankfully much safer than when I was a kid.

It’s not just about new cars either, it’s impacts for 6 years. So fairly normal large family cars that will have normally depreciated most of their value and be well into the affordable used segment will be slapped with the tax.

 

[HenryT]

Any chance of a sub-£40k car from Tesla soon? A model 2?

No and more importantly even less chance of one in 3 tears time when it becomes an issue.

 

[GRiLLA]

You are right of course.
Some ask me as an EV owner:
I'm looking at a 2nd hand EV (my old car isn't running all that well etc), maybe 2 year old, to 'do the right thing' and reduce my costs on fuel, servicing, tax etc
How does it work out?
In the past I used to say, if you can charge mostly at home, you'll likely save in the long run.
But with the way the tax is going and costs of supercharging (even home power prices) etc, i think my advice will now be, run the old car for along as poss, then buy another efficient diesel.

But for those with more money available, an EV is probably the right way to go for sure.
I'm just trying to look at mass EV adoption as 2nd hand ones become more affordable.

I would tell them that an EV is a great choice as it has great performance, is easy to drive with regen breaking and it's super convenient to be able to refuel it at home without visiting a petrol stations. What's even better is that it's has less impact on the environment and you aren't funding murderous regimes as you fill it up.

It could be cheaper, really depends on how they use it, even if it's not it's still worth it. The tax element is going to be the same as a petrol or diesel, but that's a tiny cost compared to fuel. It's likely to retain it's value better and have lower servicing cost.

 

[Electron Mike]

Why do we have to pay a higher rate of VED in 2025. Why not the normal amount, I bought a Tesla for the range and the charging infrastructure. The others were rubbish. I also received a reminder to pay my exempt Road Tax from DVLA WTF

 

[DevMar]

Why do we have to pay a higher rate of VED in 2025. Why not the normal amount, I bought a Tesla for the range and the charging infrastructure. The others were rubbish. I also received a reminder to pay my exempt Road Tax from DVLA WTF

You will only pay the luxury car tax on an EV first registered after April 1st 2025. Cars registered before then just pay the base rate. I consider that damn lucky! Taxation here was inevitable, which leads on to answering your final but about paying exempt road tax…

It’s £0 road tax which you have to “pay” yearly. Different to having no tax rules for EVs. If there was no tax rule in place then I *think* the government wouldn’t be able to arbitrarily increase it (via royal ascent, right?). So making EV owners “pay” their £0, then the government can increase it at any point, as it was promised this week?

Fully agree I could be talking out my backside here, but hey ho!