The UK government has been urged to cut Value Added Tax (VAT) on both public charging and EV manufacture by business groups ahead of its spring budget this week.
EV campaign group Faircharge delivered a letter to the Treasury calling for a cut in VAT on public charging from 20pc to 5pc, in line with home charging costs.
The letter was signed by utility Eon and OEMs Polestar, Stellantis and Jaguar Land Rover.
At the same time trade association the Society of Motor Manufacturers and Traders (SMMT) called on the Treasury to halve VAT on new EVs and change upcoming Vehicle Excise Duty rates so EVs are treated as essentials, not luxuries.
EV purchases currently have a 20pc VAT charge — the same rate as for a petrol or diesel vehicle.
Halving VAT on new EV purchases would save the average buyer around £4,000 from the upfront purchase price. Such a step would deliver an additional 270,000 EVs to the road over the next three years, the SMMT estimates.
Research by the SMMT found that 37pc of drivers interested in going electric said a VAT cut would accelerate their plans. And 26pc of drivers who were not interested in switching named it as the option most likely to change their mind.
“The budget is a crucial opportunity to re-energise the EV market, with fair tax for a fair transition. The Chancellor must end the perverse fiscal system that discourages drivers from moving away from fossil fuels and send a clear signal that the time to go electric is now,” says Mike Hawes, CEO of the SMMT.
The SMMT survey also found that last September’s decision to push back the UK moratorium on sales of new petrol and diesel cars vehicles from 2030 to 2035 has led to 24pc of drivers delaying their plans to go electric.
Before the announcement only 11pc of survey respondents interested in buying an EV said they would wait until after 2030. That figure is now at 46pc, according to the latest SMMT survey.
Private retail EV purchasing has been in decline since 2022 – with these buyers now accounting for fewer than one in four new EV registrations, compared with one in three previously, SMMT says.
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Vehicle Excise Duty
Forthcoming changes to Vehicle Excise Duty due in 2025 will result in around seven in ten currently sold EVs being subject to an ‘expensive car’ VED supplement from next year.
The SMMT is calling for this to be reversed. The body also backed the Faircharge campaign for the cut to VAT on public chargers.
The government today announced £71.5mn for four BEV R&D projects, although these were already budgeted for as part of research funding allocated by the Advanced Propulsion Centre.
Japanese OEM Nissan will receive a grant to further develop its technical centre in Cranfield, Bedfordshire, with a particularly focus on enhancing ‘4R’ (refabricate, recycle, resell, and reuse) potential.
Electric motor designers Yasa has been awarded a grant towards its work developing a dual inverter for regenerative braking in BEVs.
Empel Systems’s grant will be put towards developing a UK-designed and sourced silicon carbide power module for use in high efficiency automotive inverters and DC-DC converters.
And multinational OEM Jaguar Land Rover’s grant is to aid development of a modular family of electric machines, inverters and transmissions for future EV platforms.
Tom is an experienced business writer, specialised in the energy transition
Tom is passionate about Electric Vehicles and how Tesla, BYD, Rivian, Lucid and others are transforming automotive
