HMRC car tax changes leaving thousands of drivers ‘cash strapped’

The British Vehicle Rental and Leasing Association has warned HMRC and the Labour government that car tax changes are leaving drivers cash-strapped and threatening electric vehicle adoption

HMRC vehicle tax reforms are leaving thousands of motorists financially stretched, according to fresh warnings. Research by the British Vehicle Rental and Leasing Association (BVRLA) has revealed that salary sacrifice drivers are four times more inclined to opt for a fully electric vehicle compared to those using personal contract hire (PCH) arrangements.

Toby Poston, BVRLA chief executive, said: “The vehicle leasing sector continues to play a vital role in driving new vehicle registrations and delivering road transport decarbonisation.

“But any satisfaction from these achievements is tempered by the relentless pressure of compliance costs, cash-strapped customers, and rampant EV depreciation.

“Our industry is agile, resilient, and innovative, but it needs to work in partnership with the Government.

“The faltering used EV market and the badly designed and poorly timed eVED regime proposals are two prime examples where we need an urgent policy rethink.”, reports Birmingham Live.

Vincent St Claire, managing director at Fleet Assist, commented: “As an industry it is essential that BEV confidence continues to flourish as BEV owners come to terms with ownership being more than just lower operating costs and benefit-in-kind taxation.”

The report highlighted that three quarters of leased vehicles within the BVRLA fleet now possess zero-emission capabilities, courtesy of electric, plug-in hybrid or hybrid powertrain technology. Battery electric is the prevailing powertrain, with fresh analysis showing a varied penetration, from 83 per cent of the salary sacrifice fleet to 47 per cent of the business contract hire fleet, but only 18 per cent of the PCH fleet.

Two-thirds of PCH drivers are still operating a petrol or diesel vehicle.

Specialists, spearheaded by Mr Poston this week, have issued renewed cautions to both the tax authorities and the Labour Party government about the crucial role the current Benefit-in-Kind (BiK) tax structure plays in persuading motorists and road users to transition away from combustion engines.