EV market given welcome boost from Autumn Budget

The BVRLA has welcomed the news of long-term support for the EV market in the Autumn Statement from the Chancellor. The Chancellor announced a series of policies that directly impact BVRLA members. Overall, the announcement has been very positive for the sector. The Chancellor confirmed low, incremental Company Car Tax (Benefit in Kind) rates of 1% for EVs from 2025/26 to 2027/28. In addition, it was confirmed that Vehicle Excise Duty on EVs will commence no earlier than April 2025, giving nearly two years to prepare. Benefit in Kind (BiK) rates.

From April 2025, Benefit in Kind (BiK) rates for electric and ultra-low emission cars emitting less than 75g of CO2 per kilometre will increase by 1% annually, up to a maximum of 5% for electric or 21% for ultra-low emission cars respectively in 2027/28. Rates for all other vehicle bands will increase by 1% up to a maximum of 37% in 2025/26, then freeze for the next two years.

The BVRLA have been actively campaigning on this issue since Spring, urging Treasury to keep BiK on BEVs as low as possible for as long as possible and arguing for a 1% escalator. That the announced rates are aligned entirely with our asks is very welcome news, as was the recognition from the Chancellor that he “listened to industry bodies” when setting the rates.

Commenting on today’s announcement, BVRLA Chief Executive, Gerry Keaney, said: “Today marks a key milestone in the UK’s transition to zero emission motoring and cements the momentum we have gathered in recent years. Our sector is the driving force behind getting cleaner, greener vehicles on UK roads, with the tax regime a critical lever in making it happen.

“Our #SeeTheBenefit campaign had clear asks around keeping rates low and giving drivers confidence in future rates. The government has listened. We have engaged with MPs, the Treasury and the Chancellor directly, with our voice bolstered by input and letters from thousands of BVRLA members and industry professionals.”

Vehicle Excise Duty

From April 2025, electric vehicles registered from 1 April 2017 will begin to pay VED in the same way as petrol and diesel vehicles, moving to the standard rate (currently £10) for the first year of registration and the flat rate from the second year of registration (currently £165 per year).

Electric vehicles registered before 1 April 2017 currently in Band A will move to the Band B rate, currently £20 a year. Zero emission vans will move to the rate for petrol and diesel light goods vehicles, currently £290 a year for most vans.

The Expensive Car Supplement exemption for electric vehicles is due to end in 2025, and zero emission vehicles meeting the criteria (currently a £40,000 list price) registered from 1 April 2025 will need to pay it (currently £355 annual supplement for five year). Zero emission vehicles that meet the criteria that are registered before April 2025 will not have to pay it.

VED rates for Alternative Fuel Vehicles and hybrids will also be equalised.

There was no announcement around standard VED uplifts and HMT has advised any April 2022 VED uplift will be announced in the next Budget.

The BVRLA recognise that zero emission vehicles paying tax needs to be normalised at some point. This announcement gives more than two years of foresight for the sector to prepare for the introduction of VED. The BVRLA will continue to engage with HM Treasury to ensure the introduction is as fair as possible.

Other announcements to note:

From 6 April 2023, Car and Van Fuel Benefit Charges and van benefit charge will increase in line with CPI.
First Year Allowance for Electric Vehicle Chargepoints will extend to 2025 to incentivise business investment in charging infrastructure.
The funding for the UK’s Catapult Network will increase by 35% (a £1.6 billion investment) compared to the last five-year funding cycle.
The Government is appointing Sir Michael Barber as Advisor to the Chancellor on Skills reform.