Home Estate Planning Spring Budget 2024: Calls grow for electric vehicle tax break amid sales slowdown

Spring Budget 2024: Calls grow for electric vehicle tax break amid sales slowdown

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The chancellor must end a tax on public electric car charging in the Spring Budget to ensure sales of electric vehicles keep pace, a slew of carmakers and energy companies have warned.

An open letter to the Treasury, led by campaign group Faircharge and signed by the likes of JLR, Stellantis and EON, has warned EV drivers are being “unfairly disadvantaged by outdated, higher rates of VAT.”

Electric vehicle drivers who can charge at home pay just five per cent VAT on their energy bill, under current policy. But those without driveways are reliant on public charge points, which are subject to the full VAT rate of 20 per cent.

According to a survey by Auto Trader last year, close to a third of consumers cited the expense of public charging as a “key barrier” to owning an EV.

Auto Trader’s research estimates drivers charging EVs at home could save £865 annually compared to internal combustion engine models, but if they relied on public charge points it would cost around £264 more.

Quentin Willson, the motoring journalist and founder of Faircharge, said: “If the Government is serious about wider EV adoption, they must revisit this out-of-date VAT legislation – written in the early 1990s before the arrival of electric cars – and make it fit for purpose.

“The cost to The Treasury would be very small compared to the hundreds of billions spent supporting fuel duty, but the benefit to EV drivers without private parking and to urban air quality would be significant and remove this unnecessary barrier to EV adoption.”

Ian Plummer, commercial director at Auto Trader: “It is simply unfair that EV owners without driveways should have to pay more for the privilege of improving air quality. It’s time for the Treasury to address this injustice and give electric vehicles the best chance of widespread adoption, rather than remaining the preserve of the wealthy.”

Other signatories of the letter to Hung ahead of the Spring Budget include the EV trade body ChargeUK, Polestar, Greenpeace and advocacy group the Campaign for Better Transport.

It comes after a string of warnings from the automotive sector that EV sales growth has started to soften.

The Office for Budget Responsibility halved its forecast sales up to 2027 in November, citing high prices and interest rate hikes as key barriers to sales.

Last week, the chief executive of Polestar, the carmaker dubbed ‘Europe’s Tesla,’ said drivers “scared of change” was hampering uptake.

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