A shock for business in general but with some positives:
- BIK rates published to 2030 favour Electric Cars
- Massive Employers NI cost increases mean Salary Sacrifice Schemes become more attractive for both the employer and employee
- Double cab pick ups to be taxed as cars, but with transitional relief until 2029
BVRLA Chief Executive, Gerry Keaney, said: “This was a complex budget at a difficult time. The increase to employers’ national insurance will have a substantial impact on businesses and their customers. The full scale of its impact will only be seen in time.”
“For our sector, the Chancellor has left many challenges unresolved. As penalties to stay in ICE vehicles ramp up in line with the ZEV mandate, more needs to be done. The barriers relating to the rental sector, charging infrastructure, consumer education and the used EV market, all need close attention.”
“The Budget did bring some green shoots of positivity, suggesting that the government is taking the UK’s transition to cleaner, greener vehicles seriously. The confirmation that the fair EV company car tax regime will be continued at least to 2030 is a positive step, supporting a vital contributor to the transition and a bright spot of success up to now. Extending the Plug-in Van Grant provides the sector with a much-needed boost.”
Autumn Budget 2024: what you need to know
30 Oct 2024
In a Budget that had been heavily publicised as being a painful one, with difficult decisions needing to be made, the extent of the increase in Employers’ National Insurance Contributions, will have caused concern and disquiet for many members.
Focusing on our sector, the announcements were more mixed.
The sharp rise in Vehicle Excise Duty for petrol and diesel vehicles will add significant costs for a large part of the membership, but changes to VED are welcome for electric vehicles.
The Chancellor has given some foresight around support to promote the uptake of electric vehicles. The extension of the Plug-in Van Grant and the publication of two more years of fair EV Benefit-in-Kind rates are big wins for the BVRLA campaigning efforts and we would like to thank all our members for your support.
More work needs to be done though, especially in relation to Full Expensing not yet being extended to the rental and leasing sector, despite a commitment that this will continue to be explored. We also need to continue campaigning for the change in the Expensive Car Supplement threshold for electric vehicles.
Key issues
Vehicle Excise Duty
The government will change the VED First Year Rates for new cars registered on or after 1 April 2025 with the justification that this will strengthen incentives to purchase zero emission and electric cars, by widening the differentials between zero emission, hybrid and internal combustion engine (ICE) cars.
- Zero emission cars will pay the lowest first year rate at £10 until 2029-30.
- Rates for cars emitting 1-50 g/km of CO2, including hybrid vehicles, will increase to £110 for 2025-26.
- Rates for cars emitting 51-75 g/km of CO2, including hybrid vehicles, will increase to £130 for 2025-26.
- All other rates for cars emitting 76 g/km of CO2 and above will double from their current level for 2025-26. Autumn Budget 2024 133 These changes will apply from 1 April 2025.
The government will uprate standard VED rates for cars, vans and motorcycles, excluding first year rates for cars, in line with the RPI from 1 April 2025.
Expensive Car Supplement
The government recognised the disproportionate impact of the current VED Expensive Car Supplement threshold for those purchasing zero emission cars and will consider raising the threshold for zero emission cars, but only at a future fiscal event.
BVRLA view – increasing incentives to transition to electric vehicles is needed but as the penalties for remaining in ICE vehicles grow, this is something that will become more challenging for members without additional Government support to make the transition work for all user groups.
Plug-in Van Grant
The government has committed to providing £120 million in 2025-26 to support the purchase of new electric vans via the plug-in vehicle grant and to support the manufacture of wheelchair
accessible EVs.
BVRLA/CBVC view – in such a difficult economic climate, the extension of the Plug-in Van Grant is a massive win for the sector.
Benefit-in-Kind rates
The government has set rates for Company Car Tax (CCT) for 2028/29 and 2029/30 and have said that they will continue to strongly incentivise the take-up of electric vehicles. The rates for EVs will rise to 7% in 2028/29 and 9% in 2029/30. Rates for hybrid vehicles will be increased to align more closely with rates for internal combustion engine (ICE) vehicles. There will be a cliff edge hike for low emission PHEVs from 5% to 18% between 2027/28 and 2028/29.
Full details of the rates can be found CBVC Tax Calculator
The government also confirmed plans to mandate the reporting of benefits-in-kind via payroll software from April 2026. This will apply to income tax and Class 1A National Insurance contributions (NICs).
BVRLA view – Government’s announcement today of two more years of certainty is much needed and their recognition of the importance of providing “long term certainty for taxpayers and industry” means that we have been heard. Although an increase of 2% per annum is more than the 1% escalator that we would have liked, at a time when fiscal head-room is limited, moderate increases, with certainty, up to 2030 is welcome. As is the continuation of salary sacrifice, a critical enabler of a fair transition.
Full Expensing
The government will explore extending full expensing to assets bought for leasing or hiring, when fiscal conditions allow.
BVRLA view – we are very disappointed that the Government have not committed to this today and believe that it is a missed opportunity for promoting investment. We will continue campaigning for this and have already been engaging with HMRC and HMT about this today.
Other announcements to note
- Double-cab pick-ups– the government will treat double cab pick-up vehicles (DCPUs) with a payload of one tonne or more as cars for certain tax purposes. The existing capital allowances treatment will apply to those who purchase DCPUs before April 2025. Transitional benefit in kind arrangements will apply for employers that have purchased, leased, or ordered a DCPU before 6 April 2025. They will be able to use the previous treatment, until the earlier of disposal, lease expiry, or 5 April 2029.
CBVC Comment–
The new Ford Rangers have an approximate P11D value of £60606 and co2 of over 200g/km this makes them a 37% BIK Tax vehicle so will mean that the Benefit in Kind on these is £22424 so a 40% tax payer whom uses the truck for personal use will be paying £747.47 per month in BIK tax, the Employers Class 1 A NIC on these will be £3363.60 per annum
- Fuel duty freeze– The temporary 5p cut in fuel duty rates will be extended by 12 months and will expire on 22 March 2026. The planned inflation increase for 2025-26 will also not take place.
- Ending contrived car ownership schemes –The government will publish draft legislation relating to loopholes in car ownership arrangements, through which an employer or a third party sells a car to an employee, often via a loan with no repayment terms and negligible interest, then buys it back after a short period.
- 2025-26 Van Benefit Charge, Van Fuel benefit Charge and Car Fuel Benefit Charge – The government will uprate the Van Benefit Charge and Car and Van Fuel Benefit Charges by CPI from 6 April 2025
- Heavy Goods Vehicle VED and Heavy Goods Vehicle Levy rates – The government will uprate the Heavy Goods Vehicle (HGV) VED rates in line with RPI from 1 April 2025. The government will also uprate the HGV Levy in line with RPI from 1 April 2025
- Clean energy mission and Charge point infrastructure– £200 million investment in 2025-26 to accelerate the rollout of electric vehicle charging infrastructure, including funding to support local authorities to install on-street charge points across England
- Potholes –– government has committed to fix an additional one million potholes across England each year, investing almost £1.6billion to maintain and renew the nation’s roads.
- Industrial strategy and National Wealth Fund -Over £2billion over 5 years has been committed to support the automotive sector, including the zero emissions vehicle manufacturing sector and supply chain, providing the long-term certainty that industry need to invest in advanced, greener technologies.
- Corporation Tax Roadmap– To provide stability and predictability for business, the government is publishing the Corporate Tax Roadmap.
- Single major fiscal event ––lastly, the Government has committed to an annual Autumn Budget.
Our thanks to the BVRLA
