Back to Autumn
Statement page
Vehicle and excise duty
The Chancellor announced that, from April 2025, electric vehicles will also begin to pay vehicle excise duty (VED). New zero emission cars registered on or after 1 April 2025 will pay a lower rate of £10 in the first year of registration increasing to the standard rate of £165 in year two. Cars registered before this date will pay VED at the standard rate. This seems to go against the pledge to reduce UK carbon emissions by 68%, by 2030.
Company car benefit-in-kind rates
Company car tax rates for electric vehicles have been at historically low rates in recent years. An employee with a fully electric company vehicle is currently subject to a taxable benefit-in-kind rate of just 2% on the list price of the vehicle.
The Chancellor announced that these rates are set to increase from April 2025 at a rate of one percent per year for three years. This will take the benefit-in-kind rate up to 5% for electric company cars by the 2027-28 tax year.
For example, a higher rate taxpayer is provided with a company electric vehicle with a list price of £40,000. In 2022/23, they would have a tax liability of £320 increasing to £800 by 2027/28.
Hybrid cars will reach a maximum rate of 21% by April 2027/28 but this may be lower, depending on the mileage range of the vehicle. All other company cars will also see rates increased by 1% per annum capped at a maximum of 37% for vehicles with CO2 emissions of 145g/km per year.
Although rates for electric vehicles are increasing, they still remain low compared to other vehicles and the announcement of rates up until 2028 provides employers and employees with some certainty over future tax liabilities.
Fuel charges
It has been confirmed that the car and fuel benefit charges will both increase in line with growth in CPI in 2023/24. The fuel benefits are currently set at £25,300 and £688 for cars and vans respectively and again are multiplied by the relevant company car benefit percentage.
Electric vehicle charging points
100% first year capital allowances for the cost of buying and installing electrical vehicle charging points will now be available for businesses until 2025. This relief was originally expected to end in 2023 but has now been extended by a further two years.
Back to Autumn
Statement page