Spain pays drivers £8,500 to go electric ... as Labour’s £3,000 tax kicks in

Spain has reintroduced £8,500 electric car grants in the same week that Labour brought in “unfair” tax increases on Britain’s battery-powered vehicles.

New electric vehicle (EV) drivers in Britain now face paying up to £3,110 in tax bills during the first six years of ownership.

All electric cars are liable for vehicle excise duty (VED), while models worth more than £40,000 come with an added £425 charge payable annually between the second and sixth years of a car’s lifespan.

Last week’s hefty tax increase – which experts fear will hamper EV uptake – is in stark contrast to subsidies introduced in Spain.

Spaniards can now benefit from up to €7,000 in aid if they scrap a petrol or diesel-powered car older than 10 years.

The grant, which is capped at €5,500 if there is no car exchange, comes in addition to a €3,000 income tax deduction if the new car costs less than €45,000.

The maximum potential savings on buying a new EV stand at €10,000 (£8,500). A previous subsidy scheme came to an end in December, but it has now been brought back to life.

Britain, meanwhile, has not offered an electric car grant since 2022 when the Tories ended a £1,500 scheme nearly a year before the industry expected.

Standard annual car tax, which now costs £195 for zero-emission cars, is also cheaper in Spain. EVs also benefit from a 75pc discount in major cities such as Madrid, Barcelona and Valencia.

The Spanish government hopes its relaunched subsidy scheme, which will run until December at a cost of €400m, will boost EV uptake. Last year, 134,000 were sold in the country, accounting for 11.4pc of total car sales.

In Britain, 19.6pc of sales were EVs yet the numbers were heavily skewed by fleet sales, which comprised two thirds of the sales.

There are fears the new tax bills for electric cars will deter potential buyers. Fewer than one in four drivers intend to buy an EV in the next three years, according to the Society of Motor Manufacturers and Traders.

The £425-a-year expensive car supplement, which kicks in when a car has a list price of more than £40,000, will impact the majority of drivers thinking of going electric.

Vauxhall lowered the price of its Astra Sports Tourer and Grandland electric cars to come in below the threshold, but most new EVs top £40,000.

Chris Rosamond, of Auto Express, said: “Levying what is basically a tax set on petrol cars eight years ago on to EVs today is unfair, especially when you consider the large sums involved.

“With private EV uptake already struggling and cost being one of the main deterrents for potential buyers, this change risks slowing adoption at a critical time. The Government should be supporting drivers in making the switch to EVs, not penalising them.”

John Cassidy, of Close Brothers Motor Finance, said: “The Government’s decision to apply VED to EVs only adds to cost concerns which are piling up for motorists, and adds further doubt over the proposed 2030 ban on new petrol and diesel vehicles – with 78pc of motor dealers already lacking confidence that this will go ahead.”

In the Budget, Labour conceded that the expensive car tax has “disproportionate impact” on EVs and said it would “consider raising the threshold for zero-emission cars only at a future fiscal event”.

Rachel Reeves, the chancellor, however, did not mention electric cars in her Spring Statement.

A Treasury spokesman said: “We’re investing over £2.3bn to help industry and consumers make a supported switch to EVs, helping deliver our Plan for Change by kickstarting growth and productivity across the UK while helping tackle climate change.

“Our approach ensures fiscal stability while providing incentives through the tax system, such as freezing VED first-year rates (£10) for EVs to encourage the transition to electric and zero-emission vehicles.”