The Chancellor has provided advance notice of the direction of automotive taxation for several more years, and electric vehicles escape with low levels of tax.
Company car tax
- Electric cars will see the BIK percentage increase by 1% per year from April 2025. So expect to see 3% in 2025/6, 4% in 2026/7 and 5% in 2027/8. At all these levels it makes strong financial sense to choose an electric company car, and salary sacrifice schemes could become even more popular now that the future tax regime has been mapped out.
- For PHEVs and ICE vehicles the BIK tax percentages will increase 1% in April 2025, and remain fixed for 3 years. The existing maximum threshold of 37% remains. User/choosers should still be looking at PHEVs with a battery range of 40 miles or even 70 miles to hit the thresholds for vastly reduced company car tax.
Vehicle Excise Duty
Electric vehicles will no longer be exempt from VED after 1st April 2025. The rates are likely to increase before then, but will be based on the current structure of:
- First year rate of £10 on electric cars
- Standard rate of £165 plus £355 if costing more than £40,000
- Electric vans to pay £290
- Zero emission L category (motorcycles) to pay £22 per year.