Government can boost electric vehicle demand if it amends its changes to the expensive car supplement an industry leader has said.
Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, said that the expensive car supplement – which adds an additional tax for the first five years following the first tax payment made when a car costing over £40,000 is a year old – applies to the ‘overwhelming majority’ of electric vehicles and made switching to an EV trickier for buyers.
He said, ‘We are talking to Government about whether they will amend that because that was introduced in 2017.’
Zero emission cars can pay a £10 first year tax but then attract hundreds of pounds payment for five years in subsequent renewals if they cost more than £40,000 including extras when bought. It can add up to £620 annually for years two to six.
It is the list price which is used to calculate the higher VED rate so a dealer’s discount means you would still have to pay the higher rate unless you delete options or trim which would take it over the £40K ceiling.
