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The recent Autumn Statement saw the Chancellor set out plans to “rebuild our economy”. Natalie Middleton reports on how it affects fleets with electric vehicles

In his first Autumn Statement as Chancellor, Jeremy Hunt announced plans to tackle the cost-of-living crisis and rebuild our economy, focused on “stability, growth and public services”. Admitting the UK “is now in a recession” during his speech, Hunt said the £55bn package of tax rises and spending outlined in the Budget would help inflation drop “sharply” from 9.1% this year to 7.4% in 2023.

When it came to fleet-specific announcements, electric vehicles were front and centre. The Government is to start raising company car tax rates for electric vehicles from 2025, but with yearly increases capped at 1% until 2028 to keep rates low. The changes set out that electric and ultra-low emission cars emit-ting less than 75g of CO2 per kilometre will increase by 1 percentage point in 2025/26; a further 1% in 2026/7 and a further 1% in 2027/28 up to a maximum appropriate percentage of 5% for electric cars and 21% for ultra-low emission cars.

Meanwhile, the appropriate percentages for rates for all other vehicle bands will be increased by one percentage point for 2025/26 up to a maximum appropriate percentage of 37% and will then be fixed in 2026/27 and 2027/28. Paul Hollick, chair at the Association of Fleet Professionals, said that the announcement on the EV BiK rates going forwards was the “biggest win from the news”.

“We’ve been campaigning, along with the BVRLA and other industry bodies, to ask government to both limit any rise in benefit in kind for EVs and to provide longer-term certainty that would allow fleets to plan for the future,” added Hollick.

For a different industry perspective, Matthew Walters, head of consultancy services and customer value at LeasePlan UK, commented: “At last! We finally have the rates of Company Car Tax (CCT) for 2025/26 and beyond. Given that fleets are now entering into contracts that reach into those years, having this clarity is a welcome development.

“We note with particular interest the new rates for electric vehicles,” he added. “They will rise slowly by one percentage point a year to a high of 5% in 2027/28, which is the final year for which we now have certainty. PHEVs will also see their rates increase by one percentage point a year.”

VEHICLE TAX INTRODUCTION

Meanwhile, the Statement also included the news that electric vehicles will no longer be exempt from Vehicle Excise Duty from April 2025 in a move to make the motoring tax system “fairer”.

The measure, which will be legislated for in the Autumn Finance Bill 2022, will affect both new and existing electric cars and vans.

Hollick believed this was the biggest disappointment of the Autumn Statement. “This is still some time away and probably the strategic thinking is that there will be market equity between EV and ICE by that point,” he reasoned.

“Of course, bearing in mind the £40,000 expensive car supplement in VED, this could be part of a government strategy to try to make EVs more accessi-ble, with manufacturers being effectively encouraged to keep prices below this level, especially in the light of recent price escalation following the pandemic.”

OTHER EV-RELATED MEASURES

Although the Chancellor imposed new and higher taxes on EVs in this Autumn Statement, he also introduced some measures that will make the transition easier. This includes the extension to 2025 of the 100% first-year allowance for companies installing charge points.

Also significant is the confirmation that the energy price cap will be set at £3,000 a year from April 2023 to March 2024. “This will help to keep the whole life costs of EVs down – and protect fleets and motorists from the worst fluctuations of the energy market,” said Walters. “However, it should be noted that AER – Advisory Electric Rate (the rate at which companies pay company car mileage for EVs) has been increased to 8ppm from 5ppm from December 2022 and the Government have aligned the review of the rate to the AFR (Advisory Fuel Rate for petrol and diesel), which are decided upon quarterly.”