Electric Vehicles: VAT

Question

The Government has no plans to review the VAT treatment of the lowest cost electric vehicles. All new vehicles, including electric vehicles, are liable to the standard rate of VAT at 20 per cent. However, there is a special VAT scheme available for used cars, including electric vehicles, under which VAT is only charged on the profit made by the dealer. In addition, VAT is not charged on used cars, including electric vehicles, bought from a private owner.

The Government provides Plug-in Grant’ for zero emission cars, ultra-low emission vans, motorcycles and taxis, which provide a discount to the cost of a new vehicle, reducing prices for the consumer. At the Spending Review in 2020, the Chancellor confirmed £582 million to extend these grants in the year 2022-23.