UK Budget 2024: Chancellor Boosts EV Adoption with Tax Breaks and Incentives
“We want to support the take up of electric vehicles,” says Chancellor Rachel Reeves.
Chancellor Rachel Reeves has reaffirmed the government's commitment to a greener future, extending tax breaks and incentives for electric vehicles (EVs) in the Autumn Budget.
Key EV Incentives:
Lower Company Car Tax: The government has extended the low Benefit-in-Kind (BiK) tax rate for company cars, potentially saving drivers thousands of pounds annually.
Savings compared to petrol/diesel: For a £40,000 EV and a 40% tax bracket, the annual tax bill is a mere £320, compared to over £4,900 for a petrol car like a Skoda Scala.
Monthly Savings: That's a monthly saving of £386.66 or a yearly saving of £4,640.
Reduced Road Tax: The £10 first-year Vehicle Excise Duty (VED) rate for EVs will remain until 2030.
Government's Zero-Emission Ambitions:
The government aims to phase out the sale of new petrol and diesel cars by 2030 and all new cars and vans by 2035.
The Budget says:
“The transition to electric vehicles (EVs) is crucial to decarbonising transport and will support growth and productivity across the UK.”
“The government has committed to phasing out new cars that rely solely on internal combustion engines by 2030 and that from 2035 all new cars and vans sold in the UK will be zero emission.”
How does this budget help EV adoption?
Extending the existing company car tax relief scheme for new car leases is welcome but sadly there is nothing new in this budget to accelerate the adoption by private buyers of new or second hand cars. For example the government could have announced a tax free salary sacrifice scheme for private EV purchases of new or second hand EVs.
There also continues to be uncertainty about the 2030 ban of ‘combustion engine’ cars - we expect this will mean hybrids can still be sold, but it’s not been clarified whether it will still be possible to purchase non plug-in ‘mild hybrids’ from this date.
Labour will also be sticking with the previous government’s plans to introduce road tax for EVs from next year (albeit the first year road tax will be fixed at £10). The Expensive Car Supplement exemption for electric vehicles is also going to end in 2025. New zero emission cars registered on or after 1 April 2025 will therefore be liable for the Expensive Car Supplement - this currently applies to cars with a list price exceeding £40,000 for five years and is currently £410 a year. This means EV drivers with an 'expensive car' will pay up to £600 a year for road tax.
To help make electric vehicles significantly more accessible to the general public, the government have announced that they will invest over £200 million in the years 2025-26 to effectively increase the UK’s electric charge point network. This substantial funding will play a crucial role in expanding our charging infrastructure, particularly in those locations where charging access remains notably limited – for example, in densely populated urban areas and along major motorway routes.
Additionally, a further £120 million will be allocated to support the purchase of new electric vans through the plug-in vehicle grant scheme. This grant initiative also encompasses support for the manufacture of wheelchair-accessible electric vehicles, thereby making electric options much more accessible to a broader and more diverse range of drivers.
To fully realize the potential of EVs, the government must continue to invest in charging infrastructure, especially in underserved areas, and prioritize the needs of disabled drivers.