Electric Vehicles
From April 2025 the new road fund licence (commonly referred to as road tax) will be coming into force. A decision taken by the former government’s last treasurer, Jeremy Hunt, and carried through by the current government, will see the current exemption on EVs from road tax replaced by the new legislation and some EV owners could see a tax bill of over £600 coming through the post. It appears that this will come as a shock to many, with Motorpoint announcing that a study showed 83% of EV owners didn’t know about the change.
Those cars costing over £40,000 will be subject to an ‘expensive car supplement,’ currently charged on all other vehicles (petrol, diesel), leading to an additional £410 (and for petrol/diesel cars, emission levels mean there is even more tax to pay, dependent on the level of emissions of the car concerned).
The government is doing all this in order to combat the reduction in income raised through fuel duty and VAT on petrol/diesel as more people buy electric cars.
It is important to realise that a vehicle can pay road tax at any point in the year and it is taxed from the start of the month the duty is paid in (e.g. tax paid on 24th of February will be taken as starting 1st February). Given this, we encourage all motorists with an electric vehicle to renew on the 1st of March, essentially pushing the change 11 months down the road. Note however, this saving will only apply to electric vehicles registered between 1 April 2017 and 31 March 2025; any car registered before then will only pay around £20 a year.
EVs registered from 1 April 2025 will pay £10 for their first year, at least £195 from year two - and most likely even more in the following years.
Double cab pickups
For the second time in a matter of 18 months, HMRC has done a full 360 on an important decision that affects lots of businesses. We don’t know how regular taxpayers are supposed to keep up with the changes for double cab pickups when we ourselves are struggling to plan more than a few months ahead due HMRC’s persistent vacillating. Whilst we do not anticipate any further changes, past U-turns mean we cannot be certain we won’t be writing another article like this in the next 18 months!
Double cab pickups are currently classified as “commercial vehicles”, which means that for taxes purposes they are treated the same as vans. From 6 April 2025 a change will come into effect, meaning the purpose of the vehicle’s design will determine its tax treatment. Essentially, what’s going to happen is that as a double cab pickup can be used as both a carrier of passengers and goods, the passenger treatment (i.e. treating it as a car as opposed to a van for tax purposes) will take precedence for tax purposes.
There are some important timings however…
Providing a lease, order or purchase happens prior to 6 April 2025 the van rules will apply until 5 April 2029. Also, in the event of a deposit being paid prior to 6 April 2025, providing the remaining balance is paid and delivery made before 1 October 2025, the vehicle will also be treated as a van.
This treatment effects capital allowances (deductions from taxable profits for asset purchases) and benefit in kind (non-monetary pay) only: there is no change in the treatment for VAT, providing the payload capacity is over 1 tonne. VAT is recoverable for VAT registered businesses.
If you have any questions on either EVs or double cab pickups, please get in touch.
Callum McKinnon, M&S Accountancy and Taxation Ltd
