In its recent Autumn 2022 budget, the Government unveiled significant amendments to electric vehicle (EV / ZEV) road taxation (Vehicle Excise Duty / VED) and exclusion arrangements concerning expensive car supplements.
Key Changes Overview:
- EV Road Tax: Effective for all electric cars and vans registered on or after 1 April 2017, a reduced first-year tax rate of £10 will be applicable. Subsequently, the standard road tax rate, currently set at £180 per year for cars and £320 for light commercial vehicles (vans), will be implemented.
- Expensive Car Supplement for EVs: Commencing 1 April 2025, an additional fee of £390 per year will be levied for a duration of 5 years on EVs with a list price exceeding £40,000 at first registration.
Impact on New EV Quotes:
- Standard Rate Inclusion: Beginning March 2024, standard road tax rates for EVs will be incorporated into quotes. This adjustment is anticipated to increase monthly payments by approximately £10 for a 3-year contract and £11.25 for a 4-year term.
- Expensive Car Supplement Inclusion: For EVs exceeding £40,000 in list price, the cost of the expensive car supplement will be factored into quotes from early 2025. This addition is projected to augment monthly payments by approximately £21.66 for a 3-year contract and £24.38 for a 4-year contract, in addition to the standard EV road tax.
Implications for Leased EVs:
- Tax Invoicing: Effective 1 April 2025, if road tax is not encompassed within the EV lease rate, it will be invoiced annually as a lump sum on the vehicle’s registration anniversary at the applicable rate. Conversely, if road tax is included, additional invoices will only be dispatched to cover Government-induced increases.
- Exemption: The expensive car supplement does not pertain to any electric vehicle registered before 1 April 2025. Further communications will be issued closer to the date for any affected vehicles currently on order.
If you’ve got any queries as to how this impacts your current or future lease specifically, please reach out to your P+B relationship manager or our client services team.
Rate reference obtained from “Rate of Vehicle Tax” 19/10/23
