Major car tax changes for electric cars coming to 'support uptake of EVs'

Rachel Reeves has unveiled major car tax changes for electric cars to 'support uptake of EVs'. The Labour Party government Chancellor Ms Reeves has maintained the Benefit-in-Kind tax rate for electric cars in a move hoped to help more drivers make the switch.

Ms Reeves announced that the existing incentives to use a company car will remain in place. Ms Reeves said: "We want to support the take up of electric vehicles. So, I will maintain the incentives for electric vehicles in company car tax from 2028 and increase the differential between fully electric and other vehicles in the first year rates of Vehicle Excise Duty from April 2025.

"These measures will raise around £400million by the end of the forecast period." Benefit-in-kind (BiK) taxes are paid by employees in the form of a salary sacrifice for being able to use a company car and are deducted from payslips every month.

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Mark Tongue, Joint CEO and founder of UK vehicle lease firm Select Car Leasing, has welcomed the continued fuel duty freeze announced in the Autumn Budget. Mr Tongue said: “While we appreciate that national coffers need to be filled, hitting motorists with a hefty fuel duty hike would have been deeply unfair and we welcome the Chancellor’s approach in the midst of a continued cost of living crisis.

“Motorists have long been an easy target when it comes to tax cash grabs and the Chancellor’s somewhat surprising announcement, given predictions about the Autumn Budget, will come as a relief to drivers who are struggling against a backdrop of sky-high insurance costs and rising pothole-related repair bills.

“We also welcome the Chancellor’s decision to maintain the existing incentives for electric vehicles when it comes to company car tax from 2028. We know, from speaking with our own customers, that there’s a growing appetite for electric vehicles. In a recent poll, around 40 per cent of Select Car Leasing customers said they were ‘seriously considering’ an EV as their next car or van while a majority, around 44 per cent, were looking to make the switch within the next four years.

“What’s important now is that we continue to improve the EV charging infrastructure while also ensuring that motorists are equipped with the right knowledge about the benefits of EVs. Again, our poll showed that a significant number of lease customers (around 13 per cent) said they still ‘didn’t know enough’ about EVs to form a proper opinion.

"That’s a knowledge gap that needs bridging, particularly when it comes to countering some of the deeply unhelpful misinformation about EVs you might find online.”