Added supplement charges for expensive vehicles will be scrapped for vehicles with zero emissions to boost the uptake of electric cars. The update will likely see the £320 charge issued to electric car owners if their vehicle is above £40,000 scrapped.
This means all vehicles which deliver zero-carbon emissions will become tax-free regardless of their car value in a major boost for prospective buyers.
The budget statement reads: “From 1 April 2020, the government will exempt all ZEVs registered until 31 March 2025 from the VED ‘expensive car’ supplement.
“The measure will incentivise the uptake of ZEVs to support the phasing out of petrol and diesel vehicles.”
However, VED car tax rates are expected to rise for owners of traditional cars from 1 April.
READ MORE: UK fuel duty rates frozen for tenth year
Car tax rates will increase for the majority of petrol and diesel vehicles although the government have confirmed taxes for some vehicles will be frozen to support the haulage industry.
The statement says: “The government will uprate VED rates for cars, vans and motorcycles in line with RPI from 1 April 2020.
“To support the haulage sector, the government will freeze HGV VED and the HGV Road User Levy for 2020-21.”
Electric car owners are already exempt from paying car tax charges as long as their car deliveries zero-emissions.
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However, those with vehicles above £40,000 have to pay an expensive car charge regardless of the fuel type for five years after purchase
Petrol and diesel vehicles over £40,000 have to pay a charge of £465 while this rate stands at £320 for electric car owners.
These changes will mean all zero-emissions vehicles are will become exempt from car tax payments as long as they are registered with the DVLA.
The updates are part of the government’s desperate bid to remove petrol and diesel cars from the road to meet their 2050 zero-carbon target.
What other car tax changes do I need to know about?
The changes to tax rates come after plans to change the system used to work out vehicle emission rate shoe vehicles.
Previously car tax rates have been based on testing from the New European Driving Cycle (NEDC) although these will now be based on Worldwide Harmonised Light Vehicles Test Procedures (WLTP).
Experts say this is more realistic and produces higher emissions results which could affect the amount of tax paid by motorists.
The updates could see thousands of motorists paying more car tax than previous years based on the stricter tests which give higher readings.
The Chancellor’s budget also gave the green light to updates to company car rates which will see extra tax charges scrapped on fully-electric vehicles.
Benefit in kind rates will plummet from 16 percent to zero from 2020 before a brief yearly rise of one and two percent up until 2022.
The updates will see discounts provided to dozens of expensive electric car models if they are purchased through a salary sacrifice scheme on a finance deal.
What car changes were there in the budget?
Chancellor Rishi Sunak has ensured fuel duty charges have been frozen for the tenth consecutive year.
There was speculation the charts would increase as another way to boost interest in electric cars.
However, Mr Sunak admitted people are reliant on their vehicles before announcing the levy will remain at 57.95p per litre for another twelve months.
Published at Wed, 11 Mar 2020 15:02:00 +0000