New £2k tax hits electric car buyers - heres what you need to know

Starting next spring‚ electric-car buyers face a hefty tax-hit that nobody expected: a five-year luxury vehicle charge totaling £2‚125 for cars priced above £40‚000 (which includes yearly payments of £425 between years two and six)

The tax change impacts most green-vehicles since about two-thirds of EVs cost more than the cut-off point; making the switch to electric transportation more costly than ever. Steve Brown from RSM points out that this new policy doesnt align with carbon-reduction goals: its like putting a speed-bump on the road to net-zero

The government is also rolling-out other car-related charges. Petrol-car owners will pay £100 more in vehicle tax while the most polluting cars face first-year fees up to £5‚490. Electric-car owners dont escape completely - theyll pay £10 in year one and £190 after that (the amount goes up with inflation)

This years EV sales show some growth - about 37‚000 more cars than last year but still only 18% of new-car sales; falling short of the governments 22% target. The UKs top-selling electric car Tesla Model Y starts at £46‚990 (way above the tax threshold) Even with recent price-cuts most electric models still cost more than £40‚000

The introduction of higher taxes on electric car purchases may well be counter-productive and appears at odds with the Governmentʼs ambitious plans

The Treasury says it might change the threshold later but hasnt set any dates. If the original 2017 threshold had kept pace with inflation it would now be £51‚827 - showing how out-of-date the current limit is