Electric Cars Will Lead to Tax Changes

July 27, 2017 Taxation in UK

electric cars in the UKLONDON – Electric cars may be good for the environment, but they will not be good for the UK’s tax revenues.

Taxation and car experts in the UK have come forward to warn that the government will need to implement new car taxes in the future.

The warning has come within days of the government of the UK announcing that by 2040 all new vehicles purchased in the country will need to be electric.

Currently, approximately 65 percent of the purchase price of fuel in the UK is made up of taxation, in the form of VAT and fuel duties.

As an increasing number of consumers switch to electric vehicles, the revenues drawn from fuel sales will fall.

It is estimated that for every GBP 1 spent on charging a car, the government will earn approximately GBP 0.05.

Further, as home solar-arrays become more relevant the revenues generated from car charging will also drop.

Tax experts have warned that the government will look into increasing VAT on power to compensate for the losses.
Road taxes could also be raised, especially for less efficient cars, and trucks.

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