Autumn Statement 2022 – Encouraging for electric cars, read our full response

The Government has announced in the Autumn Statement that benefit-in-kind (BIK) tax for electric vehicles (EVs) will continue to be kept low to increase uptake. The Chancellor, Jeremy Hunt, said he had listened to the fleet industry and would increase company car tax for EVs by one percentage point year-onyear for three years from 2025.

“We are pleased to see the Chancellor retain BiK at their current levels as it will continue to encourage drivers to opt for a zero-emission car. Currently 80% of our new car orders on salary sacrifice are fully electric and we anticipate this level to further increase now that drivers have visibility of the car tax levels beyond 2025,” said Paul Gilshan, Tusker’s CEO.

Read our full update below;

Company Car Tax Update

• The company car tax rates on EVs will increase from April 2025 by 1% pa for 3 years. The rates will be 2% to 2024/25, 3% for 2025/26, 4% for 2026/27 and 5% for 2027/28. This offers long term certainty to employers, employees and the fleet industry.
• The company car tax rates for ultra-low emission cars (non EVs) emitting less than 75g/km will also increase by 1% from April 2025 for 3 years, rising to a maximum of 21%.
• The company car tax rates for all other cars will increase by 1% in 2025/26 up to a maximum of 37%, and will then be fixed in 2026/27 & 2027/28.

Income Tax Rates & NLW

• The basic rate of tax will remain at 20% for the foreseeable future
  The income tax additional rate threshold (ART) at which the 45% rate comes in will be lowered from £150,000 to £125,140 from 6 April 2023. This will cost employees currently earning £150,000 an extra £1,243 in tax.
• The income tax Personal Allowance (PA) and higher rate threshold (HRT), and the National Insurance Contributions (NICs) Upper Earnings Limit (UEL) were already frozen at their current levels until April 2026. These have now been extended by a further two years to April 2028.
• The NLW rate for those aged 23 and over will increase to £10.42 per hour from 1 April 2023. The rate for other age groups is also increasing.

Vehicle Excise Duty (VED)

• Vehicle Excise Duty will be charged on Electric Vehicles (EVs) from April 2025. New zero emission cars registered on or after 1 April 2025 will be liable to pay the lowest first year rate of VED, currently £10 a year. For the second year onwards, such cars will move to the standard rate, currently £165.
• EVs registered between 1 April 2017 and 31 March 2025 will also pay the standard VED rate from April 2025.
• The VED exemption for EVs from the Expensive Car Supplement is due to end in 2025. New zero emission cars registered on or after 1 April 2025 will be liable for the supplement for 5 years if the list price of the car exceeds £40,000.
• Zero and low emission cars first registered between 1 March 2001 and 30 March 2017 currently in Band A will move to the Band B rate from April 2025 (currently £20 a year).

EV Charge Points

• The Government will legislate in next year’s Spring Finance Bill to extend the 100% First Year Allowance for EV charge points to 31 March 2025 for corporation tax purposes and 5 April 2025 for income tax purposes.

National Insurance Contributions

• The NICs primary threshold will be fixed at £12,570 from April 2023 until April 2028. This is the level at which employees start to pay Class 1 NICs on their earnings. This change, and those in the previous point means that employees will pay in tax and NICs when their income rise.
• The NICs secondary threshold will be fixed at £9,100 from April 2023 until April 2028. This is the level at which employers start to pay Class 1 NICs for their employees.

Here is a reminder of the current BiK tax rates through to 2025: