What does the 2024 Autumn Budget Statement mean for EV salary sacrifice?
The new Chancellor, Rachel Reeves, has delivered the first Labour budget in 14 years. The budget included big news on EV incentives, an increase in the National Minimum Wage, and an increase in National Insurance contributions from employers.
Now the budget announcement is over, you might be wondering what this means for EV salary sacrifice schemes.
What does the budget announcement mean for EV salary sacrifice schemes?
Reeves confirmed that the Government wants to “support the uptake of electric vehicles” and it was clear that it sees EV salary sacrifice as an important support mechanism.
This was backed up by maintaining the current tax incentives, including a low Benefit in Kind rate (or Company Car Tax) for EVs.
Is Benefit in Kind (BiK) affected by the new budget?
Benefit in Kind remains low for EVs, with an increase of 1% year by year, up until 2027 when it will reach 5%. It will then increase by 2% year on year to 9% in 2029.
Though Benefit in Kind for electric cars is increasing over the next five years, it’s staying much lower for EVs than for petrol, diesel, and hybrid vehicles. For non-EVs, it’s increasing quite dramatically.
Table showing maximum rates of BiK rates for each vehicle type.
Hybrid range based on 1-50g CO₂, non-ev based on 51g CO₂ and above.
You can find out more in our piece on Benefit in Kind and electric cars.
Is Vehicle Excise Duty (VED) affected by the new budget?
VED (a.k.a road tax) rates will also be changing in April 2025.
However, with a focus on making EVs more attractive, the Government has kept the tax on zero-emission vehicles very low, with road tax for new EVs only £10 for the first year. Meanwhile, hybrids will pay £110 or £130 (depending on their emissions) and any petrol or diesel cars emitting over 76 g/km will see road tax double.
This is good news for EVs, as the lower VED rates make them an even more cost-effective choice - reducing annual expenses compared to petrol or diesel vehicles.
The latest budget announcement is a win for EVs
The latest budget announcement is a win for EVs, with the tax savings available through EV salary sacrifice not going anywhere. And at Octopus EV we’re paving the road to net zero by proudly only offering pure electric cars, making them more affordable for all.
