The tax deduction cap for first-time registration under the "one-for-one" program has been reduced by 40%. What should you pay attention to when buying an electric vehicle?
The One-for-One Scheme, launched in 2018 and currently valid until March 31, 2024, aims to encourage car owners to consider electric vehicles when replacing their cars. Under the scheme, those who scrap and deregister an eligible private car and register a new electric private car for the first time can receive a reduction in the first registration tax, capped at HK$287,500. However, from April 1, 2024, the cap on the first registration tax deduction for the One-for-One Scheme will be reduced by 40%, with the maximum exemption amount decreasing significantly from HK$287,500 to HK$172,500. The exemption limit for general electric private cars has been reduced from HK$97,500 to HK$58,500, and electric cars with a pre-tax price of more than HK$500,000 are no longer eligible for exemption
Tax waiver for first-time registration
The following is the tax relief arrangement for first-time registration of electric vehicles in Budget 24/25, and the differences from the old arrangement:
The following is the tax relief arrangement for first-time registration of electric vehicles in Budget 24/25, and the differences from the old arrangement:
To participate in the one-for-one program, you must meet the following three qualifications:
1. Minimum 6 years old vehicle
When deregistering an old private car, it must have been registered in Hong Kong for at least 6 years before being deregistered
2. Owning an old private car for 18 consecutive months or more
Before a used private car is deregistered, the owner must have been the registered owner of the used private car for 18 consecutive months or more
3. A vehicle license plate valid for at least 10 months
For old private cars, they must have had a valid vehicle license plate for at least 10 months (i.e., 304 days or more) within the 12 months prior to deregistration, whether continuous or discontinuous
Comparison of the old and new "one-for-one" calculation methods
Under the new and old "one-for-one" program, the actual purchase amount required for electric vehicles with different pre-tax prices is as follows:
In other words, under the old "one-for-one" scheme, electric vehicles with a pre-tax price not exceeding HK$377,826 were eligible for the full first registration tax deduction. However, under the new "one-for-one" scheme, effective April 1, 2024, only electric vehicles with a pre-tax price not exceeding HK$270,349 will be eligible for the full tax deduction , a difference of over HK$100,000 compared to the old scheme's pre-tax price requirement . Furthermore, electric vehicles with a pre-tax price exceeding HK$500,000 are not eligible for the first registration tax exemption. This means that the selection of electric vehicles eligible for the full tax deduction is relatively reduced.
As car prices rise, car insurance prices also increase
Many car owners purchase full coverage insurance for their new cars or when registering their vehicles. After the "one-for-one" program lowered the first-registration tax deduction limit, the price of full coverage insurance will increase
Taking the Mercedes-Benz EQA as an example, both owners are 35 years old, and both have an O NCD
Before the reduction of the first-registration tax deduction cap under the "One for One" scheme, the car price was HKD425,000 and the full insurance price was HKD14,700
After the reduction of the first-registration tax deduction cap under the "One-for-One" scheme, the car price is HKD 540,000 and the full insurance price is HKD 17,700
This is likely one of the factors that car owners consider when buying an electric vehicle