Liberal Democrats will cut VAT on electric cars to 5 percent

Liberal Democrats electric car VAT five percentThe full Liberal Democrat manifesto has been published. It includes a cut in VAT to five percent on the purchase of electric cars

The party’s manifesto pledges to ‘tackle the clean air crisis, meet the challenge of climate change, improve people’s health, stimulate local and regional prosperity and develop British zero-carbon industries with benefits for jobs, growth and exports’.

The electric car tax proposal is a bold move. The current rate of VAT for the purchase of a private car is 20 percent.Liberal Democrats electric car VAT five percent

As an example, if a Tesla Model S costs £80,000 before VAT, a customer will pay £100,000. Under the five percent VAT rule, a Model S would set you back £84,000. Likewise, an electric family hatchback that costs £24,000 before VAT is currently £28,800 including tax. Under the five percent VAT rule, that same car would cost £25,200.

It’s a measure to help achieve the Lib Dems’ goal of all new cars sold after 2030 being electric. To support this influx of EVs, they plan to ramp-up installation of electric car chargers, from residential on-street points to powerful charge-points at service stations.

They also want to encourage individual drivers to hang up their keys, with car-sharing schemes and, potentially, ‘autonomous vehicles for public use’.

Liberal Democrats electric car VAT five percent

The onus isn’t all on the motor industry to reduce emissions, however. The party wants to end fossil fuel subsidies by 2025. Those deemed ‘frequent fliers’ will be subject to increased taxation, which will free up costs for those who fly abroad less than twice a year.

The Liberal Democrats also want to overhaul the rail network, going all-electric or all-hydrogen by 2035. They aim for no diesel trains to be running beyond 2034. Other plans include freezing rail fares and investing in the bus, tram and railway networks. Train operators that don’t meet targets could be ‘sanctioned and ultimately sacked’.

Lastly, the Lib Dems say they want 80 percent of UK energy to be generated by renewable sources beyond 2030.

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