Car tax changes mean some owners will receive ‘favourable rates’ or pay ‘no VED’

Martin Lewis gives money-saving advice on VED car tax

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The Government’s new Transport Decarbonisation Plan confirms electric car owners will pay “no vehicle excise duty” for the near future. Meanwhile, they have confirmed a “nil rate of tax” will be given to zero-emission van owners as the new models start to hit the roads.

Company car tax rates will rise slightly from their current one percent threshold but the Government still promised “favourable” rates for workers and businesses.

The report promised: “Favourable company car tax rates for zero-emission cars out to 2025.

“Zero-emission cars and electric vans pay no vehicle excise duty and a nil rate of tax is applied to zero-emission vans within the van benefit charge.”

The Government confirmed the tax system will need to “encourage the update of EV’s” in the years ahead.

The report has suggested even the second-hand electric car market could be set for a tax overhaul to boost demand.

The plan says providing road users with “affordable options” for zero-emission vehicles is “essential”

The Government said it was hoping to “develop” the second-hand electric car market through a framework of measures including tax incentives.

Meanwhile, the Government has hinted further tax changes could be on the horizon.

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They confirmed motoring taxes must “keep pace” with the change on the roads suggesting further changes may be imminent.

They added: “As we move forward with the transition to zero emission vehicles, we will need to ensure that the tax system encourages the uptake of EVs and that revenue from motoring taxes keeps pace with this change.

“To ensure we can continue to fund the first-class public services and infrastructure that people and families across the UK expect.”

The Government has pledged support to drivers and industry as they make the transition to electric cars.

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