In his Autumn Statement yesterday (17 November), Chancellor Jeremy Hunt announced some long term stability for electric cars with the announcement that benefit in kind taxation rates for zero emission cars will increase from 2% in 2025 to 5% by 2028 in 1% increments.
Plug-in hybrids will also see the rates increase by the same 1% steps to a maximum of 19% by 2028 for the least efficient plug-ins and to 13% for the majority of plug-ins on the market.
Commenting, Operations Director of Gateway2Lease, Rob Marshall, said:
“With fleets now entering new contracts over a three or four year period, to have foresight over future company car tax rates is really important. It provides certainty which is what businesses need to plan with confidence. It's also good to see that electric cars are still being incentivised by the Government with continuing low tax rates.”
The newly announced benefit in kind rates for electric cars
Changes to VED on EVs
From 2025 the Chancellor announced that electric cars will no longer be exempt from Vehicle Excise Duty.
It will see electric cars pay £10 for the first year before moving to the £165 standard rate the following year onwards. However, electric cars costing more than £40,000 will also be liable for the expensive car VED supplement which is £355 and runs for a five year period between years two and seven of the car’s life.
“I cannot see the increase in VED affecting business take up of electric cars. While I do understand it will add to the whole life operating costs, electric cars remain cheaper to run for most businesses,” said Rob Marshall.
View Our Latest Blog Posts