Clear benefits offered up by the Chancellor
Thomas McLennan, head of policy and public affairs, BVRLA pores over the announcements in the Autumn Statement and ponders the future for fleets
The nation’s purse strings have been under a constant spotlight in recent months. A cost-of-living crisis, energy rates, inflation, the list goes on. Amid this backdrop, all eyes were on Jeremy Hunt’s long-awaited Autumn Statement last month.
That statement was expected to announce tax hikes and spending cuts in an attempt to rebalance the UK’s books. For our sector, that put Benefit-in-Kind rates and Vehicle Excise Duty for electric company cars firmly on the table.
Thomas McLennan, head of policy and public affairs, BVRLA
The BVRLA, alongside other trade bodies, was pushing hard to influence decision-makers to find solutions that would benefit the fleet sector. Above all else, we wanted clarity. Knowing future tax and duty rates is essential in giving operators, drivers and customers the confidence they need to make informed decisions. This is especially the case for the move to electric vehicles, where fair tax rates are the biggest driver of uptake.
Prior to the Autumn Statement, we were rapidly reaching a point where the lack of foresight on rates would cause confidence in EV affordability to evaporate. To have those concerns directly acknowledged by the Chancellor, who confirmed EV BiK rates would only increase by one percent each year from 2025 to 2028, was welcome news.
The announcement marked a key milestone in the UK’s transition to zero-emission motoring and cements the momentum we have gathered in recent years. Our sector is the driving force behind getting cleaner, greener vehicles on UK roads, with the tax regime a critical lever in making it happen.
Our #SeeTheBenefit campaign was asking for rates to remain as low as possible for as long as possible. Thanks to the exceptional support from across the sector, we were able to achieve that.
The Autumn Statement did have a sting in the tail for the sector though, with the news that electric vehicles would be subject to Vehicle Excise Duty from 2025. This move risks reducing the total cost of ownership benefits of EVs vs ICE vehicles, with perhaps the most notable impact being seen by the used EV market where incentives are not present.
Nonetheless, the BVRLA acknowledges that this kind of move was inevitable and just a case of timing. The Government had to ‘normalise’ the concept of EV drivers paying to use the road and there is the small matter of rapidly diminishing motoring tax revenues to consider as well.
The news on VED now, for an introduction in April 2025, gives the industry that essential clarity. Knowing how the landscape will look from 2025 means we can prepare now, with costs and expectations more easily managed.
While often bringing milestone moments or drawing lines in the sand, fiscal events such as the Autumn Budget rarely signify the end of the road. The announcement on BiK brings long-term stability, but many questions remain on how VED will be introduced for EVs and what exemptions or parameters will come into play. The spectre of road pricing or some other facsimile for it, still looms large.
It is a constantly evolving situation, and one that the BVRLA and other bodies are already working to remain ahead of.
