The landscape of electric vehicle EV ownership is set to undergo a significant transformation in terms of fiscal responsibilities as 83% of EV owners remain oblivious to a looming £195 road tax bill that will be implemented from the 1st of April 2025 ...
Drivers who's EV costs less that £40K will pay £195 and if they cost more, they'll pay £600!
This upcoming change is more than just a financial adjustment; it marks a pivotal shift in government policy to address the challenges brought about by the increasing prevalence of electric vehicles on British roads.
"Up to now, EV owners have enjoyed the benefit of a road tax exemption!"
This allows them to evade any charges while contributing to a broader environmental initiative. However, with the rising number of electric cars - currently comprising around 20% of all vehicles in the UK - the government is navigating a burgeoning financial deficit linked to traditional fuel taxes.
As many electric vehicles do not consume petrol or diesel, the Treasury faces significant shortfalls, with projections estimating a potential £35 billion gap in motor taxation as a result of this transition.
According to a survey conducted by used car retailer Motorpoint involving 2,000 respondents, a staggering majority of electric vehicle owners are unaware of these impending fiscal changes. Currently, the vehicle excise duty, often colloquially referred to as Road Tax, is set to alter dramatically.
Following the guidelines established in the government's Budget announcement made by then-Chancellor Jeremy Hunt in 2022, new electric vehicles will incur a first-year charge of £10 instead of the previous £0, while those valued under £40000 will be subjected to a £195 annual road tax.
In stark contrast, EVs priced over £40,000 will face a considerable £600 road tax charge annually, inclusive of a £410 expensive car supplement, which is a distinct financial burden for owners of high-end electric vehicles. This adjustment could potentially affect tens of thousands of drivers, many of whom may find themselves surprised when the new charges take effect.
Awareness can lead to better financial planning and preparation for increased expenditure which is something that is essential for all responsible motorists. As more drivers transition towards electrification, the existing exemption creates a paradox whereby fewer motorists contribute to vehicle excise duty, impairing government revenue frameworks.
So, you can understand why the government is doing it, which means EV owners must engage in proactive discussions regarding their future financial responsibilities. Keeping abreast of changes in road tax legislation is crucial.
"Failure to do so could result in unexpected financial implications!"
As the UK strives to balance its commitment to sustainable transport with economic sustainability, understanding forthcoming changes in road tax will be key to navigating this evolving landscape effectively.
Until next time ...
HELEN BEAUMONT
Would you like to know more?
If anything I've written in this blog post resonates with you and you'd like to discover more about the new road tax for electric vehicles and how it may affect you or your business, do give me a call on 01908 774323 and let's see how I can help you.
Helen brings the personal tax planning experience of the top 20 tax companies to Essendon. Formerly of MacIntyre Hudson (with 45 offices nationwide), Helen worked at Chancery for more than 10 years before joining Essendon as the personal tax specialist.
Tax Planning can make a considerable difference to your tax liability. Helen has specialist knowledge and experience in tax planning and uses every opportunity to minimise your tax bill is utilised. By analysing your investments, income, profit and expenditures, Helen will provide strategic tax planning expertise that could offer significant savings, whilst delivering clear, honest advice and guidance.
When Helen is not at Essendon she spends time with her young son and likes going on long walks with the family dog.
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