eVED – Electric Vehicle Excise Duty
VED does not normally feature in our Budget briefings, but it is worth mentioning this year due to other commitments and announcements around the taxation of Electric Vehicles (EVs) which compliment the proposal.
The headline proposal is that from 2028, there will be an additional VED charge of 3p per mile for EVs, and 1.5p for Plug-In Hybrid EVs (PHEVs).
The government documentation makes very clear that there should still be a clear incentive for people to make the transition to EVs, so a number of other commitments are made alongside this announcement, as well as a consultation on how the new charge will be implemented. Details of that implementation are not yet known, but the announcement does say that trackers in vehicles should not be required.
The other announcements relevant to EVs are as follows:
- A further extension of 100% Capital Allowances for companies purchasing new EVs and EV chargepoint infrastructure. This relief was due to end on 31 March 2026 so will therefore be extended to 31 March 2027
- Further funding for discounts on purchases of new EVs of up to £3,750 for eligible cars.
- Raising the threshold at which new EVs pay the VED Expensive Car Supplement from £40,000 to £50,000.
- 100% Business Rates Relief for EV chargepoints and EV only forecourts for ten years.
With a period of two and a half years until implementation, there will be plenty of time to plan for these changes.
Enterprise Management Incentive (EMI) schemes
The thresholds for qualification for the highly flexible tax efficient EMI scheme have remained unchanged for many years, but are now being increased to make the scheme accessible to larger companies:
- Maximum number of employees increases from 249 to 499
- Company/group assets limit increased from £30 million to £120 million
- Maximum value of shares under option increased from £3 million to £6 million
- Maximum time for EMI options to be eligible increased from 10 years to 15 years.
The time limit of 15 years will also apply to existing EMI contracts, although it should be noted that most legal documents formalising an EMI scheme will contain the 10 year limit – those with existing schemes should therefore discuss with their lawyers having amendments made to the option rules and agreements if they want to extend their existing options to the 15 year maximum.
The requirement to notify option grants will also be removed from April 2027, which is a welcome measure in terms of reducing red tape.
There is no mention of the value of options maximum per individual changing through, so it appears this will remain at £250,000 (at date of grant).
Investment tax reliefs
A number of changes are being made to the investment limits for Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) incentives with effect from 6 April 2026:
- Maximum investment limit per company increases from £1 million to £10 million per annum (£20 million for a Knowledge Intensive Company or KIC)
- Increased lifetime investment limit per company to £24 million (£40 million for a KIC)
- Gross assets maximum for the company increased to £30 million before share issue, and £35 million after
However, while the rate of Income Tax Relief for EIS investments remains at 30%, the rate for VCT investments will decrease to 20%.
If you have any questions about how the budget might affect you, do get in touch on 01242 776000 or tax@randall-payne.co.uk.
