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New EV Tax Slams Family Car Buyers
Are you considering buying a new electric family car in the UK? Be prepared for a potential sting. Wholesale changes to Vehicle Excise Duty (VED) mean many EV buyers will face a hefty "luxury car tax," potentially slowing the transition to electric vehicles at a critical juncture.
The EV Tax Shock
Previously exempt from VED, electric cars now face a £10 "showroom tax" upfront, followed by a standard £195 yearly rate. However, the real kicker is a £425 annual "expensive car supplement" for EVs priced over £40,000. This supplement, initially targeting luxury petrol and diesel cars, now disproportionately affects EVs. Auto Trader estimates that seven in ten new EVs exceed this £40,000 threshold, making EV buyers three times more likely to pay this additional tax than petrol or diesel car buyers. Over five years, this adds up to a significant £3,100 extra cost.
Impact on the Market
This new tax, dubbed a "Tesla tax" by some, has led to a backlash from the automotive industry. Manufacturers are responding by adjusting prices of higher-spec models to stay below the £40,000 limit. Experts like Ginny Buckley of Electrifying.com argue that the unchanged £40,000 threshold is outdated, ignoring the higher base cost of EVs due to battery technology. The concern is that this extra cost will deter potential buyers from switching to electric vehicles, hindering the UK's green goals.
| Model | Price (approx.) | Key Features | Tax Affected? |
|---|---|---|---|
| Kia e-Niro | £35,000-£40,000+ (depending on spec) | Family SUV, Long Range | Potentially |
| Volkswagen ID.3 | £30,000-£40,000+ (depending on spec) | Family Hatchback | Potentially |
| Tesla Model 3 | £40,000+ | Performance Sedan | Yes |
The Larger Picture
The issue highlights the complexities of transitioning to electric vehicles. While the UK aims for a greener future, financial burdens like this new tax could inadvertently stifle progress. The lack of adjustment for the inherent higher costs of EVs further exacerbates the problem. The impact on consumer choices and the broader electric vehicle market remains to be seen.
What are your thoughts on the new EV tax? Share your opinions in the comments below.
