Is VAT the answer to getting more electric cars on the road?

Is VAT the answer to getting more electric cars on the road?   

According to the Society of Motor Manufacturers and Traders (SMMT), new UK car registrations rose by 15 per cent in February as 58,994 new cars joined the nation’s road network.  

Of these new car sales, 17.7 per cent were for battery electric vehicles (BEVs), with 10,417 fully electric cars sold.   

Alongside this, registrations of plug-in hybrids (PHEVs) rose to 4,677 units – a 7.9 per cent share of the new car market.  

According to the SMMT, with the addition of hybrid (HEV) registrations (6,883), electrified vehicles accounted for more than a third of all new cars leaving forecourts.   

There is a clear market out there for EVs, especially among company car users thanks to the tax benefits on offer.   

However, experts in the industry have said that if the Government is to reach its delivery of a net-zero road transport network there needs to be a significant rise in public charge point provision and a drop in the price of charging.   

The motor industry has published a seven-point plan to increase the number of public on-street chargers. Within this document, the SMMT has called for the extension of several grants, including the Electric Vehicle Homecharge Scheme (EVHS), which has provided vital funding for homeowners to install their own charge points.  

However, as importantly, it also recommends that VAT on electricity used for public charging points be cut to match that for home use, so that EV drivers receive parity regardless of how or where they charge their vehicle.  

Mike Hawes, SMMT Chief Executive, said, “Despite February’s traditional low registration numbers, consumers are switching to EVs in ever-increasing numbers. More than ever, infrastructure investment needs to accelerate to match this growth.”  

He said that to enable this transition the Government must continue to support “home and workplace charging, boosting public charge point rollout to tackle charging anxiety and, given the massive increase in energy prices, reducing VAT on public charging points. This will energise both consumer and business confidence and accelerate our switch to zero-emission mobility.”  

Given the recent fuel price crisis, many within the industry hope this change will come sooner rather than later.   

Although the SMMT championed a cut in VAT for electric car charging to be part of the Spring Statement, the Chancellor did not deliver on this and so there continues to be disparity on VAT for electricity between public and home charging.   

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Is VAT the answer to getting more electric cars on the road?
Is VAT the answer to getting more electric cars on the road?