New car tax Vehicle Excise Duty (VED) changes planned to come into effect within months should be scrapped, according to fleet specialists.
Electric car owners will be hit with VED fees from April 2025 despite years of owners being completely exempt from fees.
It means EV owners will be forced to pay the standard rate bringing charges in line with many petrol and diesel vehicles.
The increase in VED is one of the last major tax incentives for switching to an electric vehicle after the loss of the Plug-In car grant.
However, a new report from the Association of Fleet Professions (AFP) is calling for the plan to be ditched.
The 2024 AFP Tax & Regulation Manifesto warned increasing VED rates will “not be helpful” with the scheme likely to have a massive impact on businesses.
The AFP report read: “Plans to introduce Vehicle Excise Duty for zero emission cars, vans and motorcycles from 1 April 2025 in line with internal combustion engine (ICE) vehicles for both new and existing alternatively fuelled vehicles (AFVs), would see most zero emission vans move to the standard annual rate for petrol and diesel light goods vehicles.
“With businesses struggling to electrify vans already, adding to the cost will not be helpful.
“We would like to see VED kept at zero for electric vans in a move to aid businesses with their transition to eLCVs.”
According to HM Revenue and Customs, the new policy will “equalise the Vehicle Excise Duty (VED) treatment of all zero-emission and internal combustion engine (ICE) vehicles from April 2025.”
The move to charge electric cars was first announced by Chancellor Jeremy Hunt towards the end of 2022.
From next year, electric cars first registered on or after April 2017 will be liable to pay the lowest first-year rate of VED.
Under the current system this applies to vehicles with CO2 emissions from one to 50g/km.
From year two onwards, any zero-emission cars will move to the standard annual rate which is currently set at £190 per year.
Meanwhile, the Expensive Car Supplement exemption for EVs is also due to come to an end in 2025.
It means any new EVs registered after April 2025 that are priced over £40,000 will be liable to pay the hefty £410 fee.
