There were two main announcements made in the Autumn Statement which directly relate to electric cars.
The first of these was that from April 2025 electric vehicles will no longer be exempt from road tax, which will increase the annual running cost of owning an electric vehicle. The second announcement was an increase in the benefit in kind (BIK) percentages for electric cars, which will affect how much tax directors and employees pay each year on electric vehicles provided to them through a business to use personally.
Road tax (VED)
The amount of road tax electric car owners will be liable to pay from April 2025 will depend on when the vehicle was first registered and how much the car was worth new:
Registered from 1 April 2017 onwards
From April 2025 electric car owners will pay VED at the standard rate, currently £165 per annum.
However, for cars registered on or after 1 April 2025 this is reduced to the lowest rate in year one only, currently £10 per annum.
Registered between 1 March 2001 and 30 March 2017
Electric vehicles registered between these dates who are currently in Band A, will move to Band B. The rate of Band B is currently £20 per annum. This also applies to low emission cars, not just electric.
Expensive Car Supplement
Electric cars were previously exempt from the Expensive Car Supplement, which currently requires other car owners whose car has a list price of over £40,000 to pay the supplement for 5 years.
However, from April 2025 the exemption for electric cars will end and any new zero emission cars registered on or after 1 April 2025 will be liable for the supplement. There has been no confirmation yet on the rate electric cars will pay, however, the rate for petrol or diesel cars is currently £165 per annum, which is paid in addition to the road tax.
Benefits in Kind on Electric Cars
When an employee is provided with a company car, and they are able to use this car for personal journeys, they will be charged tax on it, known as a benefit in kind (BIK).
The BIK on electric cars is currently 2% of the list price, however, it was announced in the Autumn Statement that this will be increasing to 3% in 2025/26, to 4% in 2026/27 and to 5% in 2027/28.
Whilst this will increase the amount of tax paid by directors/employees, the same 1 percentage point increase is also being applied to the BIK rates on all other non-electric cars, which still makes electric cars far more tax efficient than their petrol or diesel counterparts, whose BIK percentages can reach 37%.
Road tax on other electric vehicles
- Electric vans will move to the rate for petrol and diesel light goods vehicles from April 2025, currently £290 a year for most vans.
- Electric motorcycles and tricycles will move to the rate for the smallest engine from April 2015, currently £22 per annum.
- Alternative fuel vehicles and hybrids will also be equalised.
If you have any questions for our Tax experts as a result of the Autumn Statement, please contact us on 01242 776000 or firstname.lastname@example.org.