The UK could be using its tax system to discourage the growth of large new SUV sales, which recent T&E analysis found had grown by 23% between 2022 and 2023.
With the Budget due next week, the environmental group said that the UK has shown some leadership with its tax system, however as company car drivers in the UK are benefiting from a progressive tax system, otherwise known as the benefit-in-kind (BiK) system, which pushes them towards battery electric vehicles this has led to corporate BEV registrations to soar from 1.6% in 2019 to 22.5% in 2023 with company car registrations now largely driving the majority of electric vehicle sales in the UK.
T&E says that the Government needs to replicate its leadership with benefit-in-kind by addressing the private car tax system.
Levying higher taxes on the most polluting and heaviest new cars would not only be an equitable source of revenue by targeting wealthier car buyers, but it would widen the tax gap between battery electric and petrol cars, making the former a more attractive option.
Revenue raised could also be used to help support the electric vehicle transition for middle and lower income groups. Instead the Government plans to introduce ownership tax (annual VED) for battery electric vehicles from 2025, which will only further narrow the tax differential between battery electric and petrol cars.
