The Chancellor’s Autumn Statement sends mixed signals to UK fleets committed to the EV transition | Climate Group Skip to main content
EV charging

The Chancellor’s Autumn Statement sends mixed signals to UK fleets committed to the EV transition

17 November 2022, 13:45 GMT 2 min read

The government’s autumn statement included several announcements that will significantly impact fleets committed to the Electric Vehicle (EV) transition in the UK. Some are welcome, reflecting asks made with the support of 28 of the UK’s leading fleets through the UKEFC 2022 Policy Paper. However, others including a new tax on EVs through Vehicle Excise Duty (VED) will risk stifling demand at a crucial moment.

Benefit in Kind (BIK) for EVs to remain low

The Chancellor announced he would increase company car tax for EVs by 1% year-on-year for three years from 2025. Maintaining low benefit-in-kind (BIK) tax rates for EVs will play an important role in continuing to increase uptake through incentivising company car drivers to go electric. The vehicles that companies purchase today are the second-hand vehicles of tomorrow.

Increased Advisable Electricity Rate (AER) to increase to reflect rising energy costs

Given huge increases in energy costs over the last twelve months, the announced increase in the AER, which reimburses electric company car mileage is very welcome. While there remains a gap between what’s advised by HMRC and what’s happening in reality, the AER rise from 5ppm to 8ppm will go some way to ensuring company car drivers are fairly reimbursed for business miles in their EVs.

Vehicle Excise Duty (VED) introduced for EVs for the first time

Electric vehicle drivers in the UK will have to start paying Vehicle Excise Duty (VED ) from 2025 onwards. Electric vehicles (EVs) will pay the same Vehicle Excise Duty (VED) as internal combustion engine vehicles from 2025. This is a step in the wrong direction, the difference between rates of VED for BEVS and ICEVs should at least be maintained and ideally increased in order to reinforce the case for going electric.