Motorists who lease their cars are being warned over looming changes in Vehicle Excise Duty (VED) and car tax rates set to take effect from April. The newly-elected Labour government has announced a comprehensive overhaul of VED bands this year.
Lincoln Vehicle Solutions has cautioned drivers contemplating vehicle leasing that they will be “affected” by the incoming VED regulations starting in April. The firm emphasised: “If you’re considering leasing a new car, whatever the fuel type, the new 2025 will affect you if the car is delivered after the April 1, 2025.”
Moreover, they explained: “Contract Hire includes the cost of Road Tax for the duration of the agreement, therefore the lease costs will increase in line with the VED changes for the vehicle.”
Data indicates that car leasing is increasingly popular in the UK, with over 1.6 million people choosing this option and accounting for 20-30% of new car acquisitions, as opposed to outright purchases, reports Birmingham Live.
Car leasing offers a rent-like arrangement, where instead of buying a car, users pay monthly fees which often prove less costly than buying a car outright. A statement from Carparison, a top vehicle leasing agency, advised customers: “Road tax on a contract hire car is administered entirely by the funder of your lease deal as they are the registered keeper of the vehicle. Therefore, no action is required from yourself regarding taxing your new vehicle as it is all taken care of by them ahead of delivery.”
“On the rare occasion that a road tax increase applicable to your lease vehicle occurs after your lease rates are agreed and during your term, you will be liable for this uplift.” The statement continued: “Your funder will contact you directly if this occurs. For example, if road tax costs increase by £5 per annum on your vehicle, your funder will contact you to arrange payment for this difference.”
Despite the ongoing cost-of-living crisis, electric vehicles (EVs) have seen a surge in popularity, with data showing a 32 per cent rise in enquiries for EVs in Q1 2023 compared to Q4 2022.