Labour facing pressure from UK car industry to halve tax charge for these new vehicles

The UK car industry has called for Labour to make a drastic cut to one particular paid by every brand-new buyer. has demanded that VAT fees

Modelling by the group suggests halving the amount of VAT by as much as 15%. Analysis by experts suggests this would put an extra 267,000 extra plug-in vehicles on the road over the next two years. SMMT chief executive Mike Hawes  “electric sceptics” and push total EV numbers above two million. 

He said: “Manufacturer investment has meant 10 times as many drivers are going electric compared with just five years ago. 

“This is great progress but, with the right support for consumers, we can go beyond current expectations to put a total of more than two million new EVs on the road by 2028. 

“Government investment to convert the ‘electric sceptics’ would energise business across the country far beyond just the automotive sector. 

“Every stakeholder would benefit from the impact of consumer incentives which, when combined with binding targets for charge point rollout and more flexible regulation, would create a virtuous circle of rising demand that stimulates green economic growth.”

VAT is currently charged at 20% of a brand-new vehicle’s pre-tax cost. 

The SMMT accepts that slicing this to 10% would have an impact on Treasury revenues, with the Government set to lose around £1,000 per car. 

However, the SMMT claims the Government have secured an additional £2.5 billion in electric car VAT receipts over the past five years as uptake increases.

The SMMT is not the only group calling for changes with leading manufacturer Ford previously calling for a VAT cut. 

Lisa Brankin, Head of Ford UK, suggested to ensure firms could meet EV targets.

She explained: “There just isn’t customer demand to meet the objectives. If it’s going to be a success, we need intervention and the Government to do something.

“If they want those things to happen they’ve got to support it.”