UK Budget 11 March 2020 - VAT Change?

[AnthonyLR]

I just read that the Society of Motor Manufacturers & Traders (SMMT) is calling for the removal of VAT from all new battery electric, plug-in hybrid electric and hydrogen fuel cell electric cars – a move which would cut the purchase price of an average family battery electric run-around by some £5,600. Combined with additional measures, including the long term continuation of the critical plug-in car grant at current levels and its reintroduction for plug-in hybrids; and exemption from VED and insurance premium tax, the upfront cost of these vehicles could be cut by as much as £10,000, helping to deliver greater cost parity with conventionally powered vehicles and making them a viable option for many more buyers.

UK new car market falls -2.9% in February as industry calls for tax free EVs to kick-start demand - SMMT

Of course nothing may come of it, but I am glad Glovis Captain is still on the water and arrives after 11 March.

 

[Lupe]

They need to invest in the charging infrastructure

 

[AnthonyLR]

They need to invest in the charging infrastructure

They sure do

 

[Mr Miserable]

They need to invest in the charging infrastructure

Why should the government support the charging infrastructure?
Tesla have demonstrated that a small manufacturer can successfuly deploy a reliable international charging network without subsidy or incentives.

 

[AnthonyLR]

Why should the government support the charging infrastructure?
Tesla have demonstrated that a small manufacturer can successfuly deploy a reliable international charging network without subsidy or incentives.

Tesla did that because it had to. With EV's hoping to go mass market I believe it makes more sense for Government to centrally boost this.

 

[ACarneiro]

No support for PHEVs
They were transition tech and it now needs to die.

 

[Jason71]

SMMT can ask for it but I suspect the govt will wait to see the effect of the bik changes before offering any further incentives. Especially ones that will be as expensive to implement as the loss of VAT will.
since we are still currently under EU rules in the transition I think there are rules about what does and does not have VAT I don't think member states are even allowed to just exempt things for some reason.

 

[DaddyCool]

it's the same story when going from horse to car to combat the build up of manure in the cities - you needed fuel stations to accelerate the transition (EV drivers are not the first to have suffered from range anxiety)
It'll be interesting to see where it goes. Personally I'd like to see more charge points where power is generated - at source as so much 'juice' is lost in distribution. eg Battery based charge stations at wind farms / hydro power stations.

 

[ACarneiro]

Transmission losses are fairly trivial compared to energy losses in transporting fuel. Cool idea, but not sure it would have great practical effect.

 

[Derek25]

I think you’re wildly optimistic if you think the government is going to cut VAT on EVs on top of plug-in car grant! Plug-in car grant is already being phased out. It’s also wildly optimistic to think the government is going to provide charging infrastructure any more than it has built petrol stations. It just needs to create the right conditions and regulations to ensure others do it.

 

[AnthonyLR]

I think you’re wildly optimistic if you think the government is going to cut VAT on EVs on top of plug-in car grant! Plug-in car grant is already being phased out. It’s also wildly optimistic to think the government is going to provide charging infrastructure any more than it has built petrol stations. It just needs to create the right conditions and regulations to ensure others do it.

The VAT cut is highly unlikely. Removing the luxury VED charge for EV's is a possibility. The Government putting money towards charging is highly likely (Sajid Javid said he was going to do this after they sacked him.)

 

[WannabeOwner]

Tesla did that because it had to

although its still doing it ...

I think you’re wildly optimistic if you think the government is going to cut VAT on EVs on top of plug-in car grant!

Scrap the grant and have 0% VAT would be OK. I guess VAT on a M3LR is around £10K?

Norway has (still has??) no VAT on EVs, and they are around 50% of new car purchases there.

Government, here, seems to have favoured Company Car takeup, thus far. No/Low BiK and 100% FYA. Haven't quite got my head around why that route is better than just giving Joe Public some dosh to buy one ... maybe Company Car route is a bit of an accounting exercise only - e.g. say 50% of the FYA is clawed back on sale (although buy another EV to replace the first and you basically get 100% FYA on the first one, and only 50% FYA on each replacement after that ... until they phase that out)

Maybe less Red Tape ... dunno ... but I'm certainly curious as to whether anyone can shed any light on why that route was chosen.

Doesn't stop them doing more / different in the budget of course. Introducing a new, massive, hand-out will increase take-up, but will also mean that all the people who were early, and have already been helping the planet, will be shafted ... not for the first time.

 

[Keeper]

Norway has (still has??) no VAT on EVs, and they are around 50% of new car purchases there.

Norway is one of the richest countries with a small population - and is blessed with some of the most beautiful scenery in the world. They can afford to do that kind of thing.

I would see here in the UK a reduction and elimination in the government grant for new electric vehicles, seeing that money mainly goes to the manufacturer's bottom line and is given to "non-needy" people who can afford to buy an electric vehicle. Also, the elimination of the OLEV grant , for the same reasons. However, to offset some of this - that the luxury car tax on any electric vehicle be set to zero but I can also soon see the day when a "fuel" tax will be levied on electricity supplied at a charging station.

 

[ItsNotAboutTheMoney]

The VAT cut is highly unlikely. Removing the luxury VED charge for EV's is a possibility. The Government putting money towards charging is highly likely (Sajid Javid said he was going to do this after they sacked him.)

There's already a purchase incentive.

If they do anything with VAT (and similarly in the USA with sales tax), they should figure a current price difference and give the equivalent deduction as a point-of-sale rebate.

If they say #10k, 20% of that is #2k.
Then scale it back as they see price differences narrow.

But, no, at this point, the last thing the UK government needs to do is give the car industry more money with which they can milk the excess of EV demand to supply. Demand isn't the problem right now.

 

[ItsNotAboutTheMoney]

The VAT cut is highly unlikely. Removing the luxury VED charge for EV's is a possibility. The Government putting money towards charging is highly likely (Sajid Javid said he was going to do this after they sacked him.)

Better to raise the luxury tax limit for EVs and reduce the tax base by the same amount, instead of scrap it.

 

[IanB]

I’m surprised they haven’t introduced a scrappage scheme like they did in 2010, 2 wins, gets old cars off the road to the crushers and gets people into electric.

I still wake up at nights in a hot sweat of the thought of my Mitsubishi FTO being crushed in 2010, I’m sorry but my wife made me do it and get a family car

 

[Rooster6655]

I just read that the Society of Motor Manufacturers & Traders (SMMT) is calling for the removal of VAT from all new battery electric, plug-in hybrid electric and hydrogen fuel cell electric cars – a move which would cut the purchase price of an average family battery electric run-around by some £5,600. Combined with additional measures, including the long term continuation of the critical plug-in car grant at current levels and its reintroduction for plug-in hybrids; and exemption from VED and insurance premium tax, the upfront cost of these vehicles could be cut by as much as £10,000, helping to deliver greater cost parity with conventionally powered vehicles and making them a viable option for many more buyers.

UK new car market falls -2.9% in February as industry calls for tax free EVs to kick-start demand - SMMT

Of course nothing may come of it, but I am glad Glovis Captain is still on the water and arrives after 11 March.

I doubt it will be implemented as demand is already there and they won't want to give up another 20%

 

[pharwood]

I am due to collect my car on the afternoon of 11th March. If the VAT cut is announced I will seriously consider cancelling the order. A £10k saving is not to be sniffed at.

 

[pharwood]

I am due to collect my car on the afternoon of 11th March. If the VAT cut is announced I will seriously consider cancelling the order. A £10k saving is not to be sniffed at.

They would probably scrap the current £3.5k grant if they cut the vat. Still a £6.5k saving though.

 

[Durzel]

Removing VAT on EVs would disproportionately benefit those who are spending more on the cars. Taycan and Model S/X owners would save tens of thousands. Do those people really need help to buy those cars?

As much as I love Teslas they are a premium EV brand. Your average driver doesn’t need a Tesla, but they do need to be incentivised to get A EV for their next car, instead of an ICE.

Getting rid of luxury VED tax would be a nice surprise, but I’m actually expecting the grant to be reduced or limited to cheaper cars (could even be the same luxury tax threshold)