What Budget 2025 means for EV drivers

A red box, shouty politicians, number crunchers working overtime…it must be another Budget. So let’s see what Rachel and her Treasury chums have in store for EV drivers. Here are our hot takes from Budget 2025.

TL;DR

For salary sacrifice, it’s good news. The low Benefit in Kind (BiK) rates are protected until 2030. Hurrah! And for all drivers, there’s good news on grants and charging costs.

Let's get into it.

What’s changed: A new mileage-based charge on electric cars (“eVED”), additional to the current vehicle excise duty (VED), from April 2028. The charge will start at 3p per mile. That will increase annually with inflation.

What it means: As a guide, for an EV driver doing 8,300 miles per year (the UK average) the charge will be £249. EVs will still incur current Vehicle Excise Duty (£195), so the total tax in this example would be £444.

Here’s how it stacks up against hybrids and petrol cars:

Nothing will change until April 2028, and the government will consult with the industry on how to implement it. In the meantime, we’re working through the details of how this will work in practice. When we know more, we’ll contact you directly.

What’s changed: The Electric Car Grant is being extended and expanded. The government will invest an extra £1.3bn and it could run until 2028-29.

What it means: The discount will continue to make eligible EVs cheaper, and can be used whether you get your car through salary sacrifice or a personal lease. 

What’s changed: The Government is raising the “expensive car” threshold for electric cars from £40,000 to £50,000 from April 2026.

What it means: Fewer EVs get hit by the charge. It’s currently £425 per year, and will be £440 from April 2026.

What’s changed: An extra £200m to promote the rollout of public charging, on top of the £400m previously allocated. Plus 100% business rate relief on all non-domestic EV charging points, including public charging networks and workplace chargers.

What it means: This reduces the operating cost of installing and running charge points. As well as incentivising businesses to accelerate rollout, it could lead to suppliers passing some of that saving on through lower (or less quickly rising) charging prices. There are already 86,000 public charging points in the UK, across 43,500 locations. There are only about 8,300 petrol stations.

What’s changed: Changes to a number of energy schemes and levies on energy suppliers. Plus the Government is also consulting on allowing cross-pavement charging solutions, making it easier for people without driveways to charge from home. 

What it means: Home charging (less costly than public chargers) is likely to be accessible to more people and cheaper.

EV growth has moved well beyond its tipping point. In 2021, there were around 400,000 EVs on UK roads. Today, there are over 1.7 million. Government initiatives have supported this growth, but the industry is now standing on its own two feet. More choice, better cars, more quality, lower prices, more chargers, more efficient charging…more reasons to make the switch than ever before.

The question is no longer “if” EVs, but “how”. No longer whether EVs are a viable alternative to petrol, but how to get behind the wheel of one.

Salary sacrifice is still the most cost-efficient way of driving an EV, with up to 40% tax savings. And with Octopus EV, it’s even cheaper, with access to exclusive offers, chargers and charging rates + other key running costs (insurance, maintenance, breakdown cover) included as standard.

Our personal contract hire - Intelligent EV - also gives access to exclusive charging rates and offers + other key running costs (maintenance, breakdown cover, road tax) are included as standard.