On March 6th, the UK Chancellor unveiled the Spring Budget, outlining a vision for lower taxes, improved public services, and increased investments.
However, the automotive sector received minimal attention, leaving many industry insiders seeking clarity. While there were no changes to Benefit-in-Kind (BIK) rates or commercial vehicle taxes, the announcement did shed light on future policies affecting zero-emission vehicles.
Starting April 1st, 2025, rates for cars with zero CO2 emissions, such as electric vehicles (EVs), will gradually rise by 1% annually, capped at 5%, until 2027/28. While this trajectory was already known, details beyond 2028 remain uncertain.
On a positive note, Chancellor Jeremy Hunt confirmed a freeze on fuel duty for another 12 months, offering relief to the average car driver by saving them £50 annually. Additionally, businesses acquiring vans through leasing will benefit from full expensing, providing tax advantages that could incentivise more companies to opt for leasing over purchasing.
However, disappointment echoed throughout the industry regarding the lack of support for the transition to greener vehicles. Many had hoped for reduced VAT on new EVs to encourage adoption, along with the removal of VAT on public charging to make it more accessible and appealing. Currently, the stark contrast between the 20% VAT on public charging and the 5% VAT for private charging remains a significant barrier, particularly for those without home charging facilities.
Despite some positives for businesses and individual road users, concerns linger about the government's commitment to zero-emission adoption. With a ban on petrol and diesel vehicles set for 2035, expectations are high for more robust support and incentives to facilitate this transition effectively.
