What the Autumn Statement Means for Motorists
What the Autumn Statement Means for Motorists

What the Autumn Statement Means for Motorists

22 November 2022
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The UK Government presented its Autumn Statement on 17th November, and in it came changes that will impact many motorists, particularly those who have set their sights on electric vehicles as a cheaper and greener option to their traditional petrol or diesel counterparts.

Perhaps most notable is the news that electric vehicles are set to be taxed from 1st April 2025. Anyone who buys a new electric car, motorbike, or van, after this date will pay £10 in tax for the first year of ownership, which sharply rises to £165 in the second year. These changes also apply to any electric vehicle that was registered between 1st April 2017 and 31st March 2025, meaning current owners of zero-emissions cars are also facing the same charges. Those with VED cars registered between 1st March 2001 and 30th March 2017 currently in VED Band A will move to Band B in 2025, the current rate for which is £20 per year. The Government’s expensive car supplement, where drivers of cars sold at or over £40,000 must pay £335 additional tax per year for the first 5 years of ownership is set to extend to electric cars in 2025 as well.

In case you thought that hybrids might be spared in this new vehicle taxation spree, the Chancellor of the Exchequer, Jeremy Hunt, has also confirmed that hybrid cars will lose their £10 annual VED discount and that rates for hybrid and plug-in cars are also set to rise by an undisclosed amount. Electric van drivers aren’t any luckier either, as their rate will move to match their diesel and petrol counterparts, which is currently £290 a year.

The other big change for electric vehicles is set to be the changes to Benefit-in-Kind (BiK) – the company car tax that incentivises businesses to use electric vehicles. Percentage rates are proposed to increase by 1% for the 2025-26 tax year, and again for the 2026-27 and 2027-28 tax years to an eventual maximum increase of 5% for fully electric and 21% for the lowest-emission cars. BiK rates for other bands will be increased by 1% in 2025-26, to a maximum of 37%. There have been promises that issues with this will be resolved in the 2026-27 and 2027-28 tax years. As a further incentive for businesses, the chancellor has announced that the government will extend the 100% First Year Allowance for electric vehicle charge points for corporation tax until 31st March 2025, and for income tax until 5th April 2025.

While we have been expecting vehicle taxation for electric vehicles and even potential road taxes for many years, the outlined amount of taxation that the government is proposing for the next few years does appear to be a heavy amount. It is also proposed in a way, and to an extent, that is not only designed to negatively impact the individual electric car owner, as opposed to corporations but is also potentially designed to negatively impact the environment too.

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