Understanding the Autumn Statement 2024

The Government also said it would change the VED’ s first rates for new cars registered on or after April 1st, 2025, to strengthen the incentives to purchase zero-emissions and electric cars.

• Zero emission cars will pay the lowest first year rate at £10 until 2029-30.
• Rates for cars emitting 1-50 g/km of CO2, including hybrid vehicles, will increase to £110 for 2025-26.
• Rates for cars emitting 51-75 g/km of CO2, including hybrid vehicles, will increase to £130 for 2025-26.
• All other rates for cars emitting 76 g/km of CO2 and above will double from their current level for 2025-26. These changes will apply from 6 April 2025.
• The government will uprate standard VED rates for cars, vans and motorcycles, excluding first year rates for cars, in line with the RPI from 6 April 2025.

The Government also recognised the disproportionate impact of the current VED Expensive Car Supplement threshold for those purchasing zero emission cars and will consider raising the threshold for zero emission cars, for a future fiscal event.

The Government announced the new company car rates for 2028/29 and 2029/2030.

The new BIK rates, along with the continued fuel duty freeze is aimed to motivate the uptake of Electric Vehicles.

You can see some of the rates displayed below, see the full list for more information (Opens in new window).

These rates apply to vehicles registered after April 6, 2021.

The above table highlights that there will be a rise in BIK rates for zero emission cars to 1% in 2025-26, 4% rise in 206-27, it also reveals the rate of 7% in 2028-29, and 9% in 2029-30. However, company car drivers of plug-in electric vehicles (PHEVs) between 1 & 50g/km, face an increase to 18% in 2028-29, and 19% in 2029-30. This shows that there is an emphasis to prevent delaying the transition to zero emission cars.

Furthermore, for businesses, the extension of incentives for Electric Vehicles in company car tax beyond 2028, along with a favourable Vehicle Excessive Duty differential for fully electric vehicles, signals the new Government’s support for sustainable transport.

It has also been announced that there will be 2.8% rise in Employer NICS, as it will be rising from 13.8% to 15% in April 2025. Whilst the rise in NIC was expected, the rise of 15% was slightly higher than what was predicted by the industry.  This will lead to increases in salary costs and whole life costs of company cars for employers, with the estimated annual impact for fleet of 100 petrol or diesel vehicles coming to £16,800, however the increase is less for Battery Electric Vehicles (BEVs) due to their lower BIK rates.

Meanwhile, the income threshold will be reduced from £9,100 to £500 per annum. This change will apply to Class 1 A rates for providing workplace benefits, such as a company car, which means that Employers’ annual NIC bills will rise by 8.7% next year. This indicates that there will be an additional £144 for a £40,000 hybrid company car, or £16 for an Electric Vehicle at the same price, making salary sacrifice schemes potentially more attractive.

Salary sacrifice enables drivers to lease vehicles through their employer and pay for them with their pre-tax income. As long as that vehicle emits 75g/km CO2 or less (which is true of most plug-in hybrid or electric cars), income tax and NICs are calculated the remaining salary and the taxable value of the car.

With company car tax bands as low as 2% for electric vehicles, this already typically offers a reduced NIC bill for employers, and that advantage will grow as those contributions cover a larger share of their salary.

Furthermore, Chanceller Reeves states that there will also be an increase in. employment allowance to help smaller businesses. The employment allowance will increase from £5,000 to £10,500, which will mean 865,000 employers will not pay any NI at all next year.

In this Autumn Budget, the Government states that from1st April‌‌‌ 2025 for Corporation Tax, and from 6th ‌‌‌ April‌‌‌ 2025 for income tax, DCPUs with a payload of one tonne or more will be treated as cars for Capital allowances, Benefits-In-kind, and some deductions from business profits.

The existing capital allowances treatment will apply to those who purchase DCPUs before April 2025 and transitional BIK allowance will apply to those who purchased, leased or ordered DCPUs before April‌‌‌ 2025. They will be able to use the previous treatment, until disposal, lease expiry, or 5‌‌‌ April‌‌‌ 2029, whichever comes first.

• The government has pledged an extra £500m for road maintenance in the next year.
• The Chancellor also pledged an investment of over £200m in 2025/26 to accelerate EV charge point rollout, including funding to support local authorities to install on-street charge points across England.
• The Government also announced that there will be a change in the VED first-year rates for new cars registered on or after 1 April 2025 to strengthen incentives to purchase zero-emission and electric cars, by widening the differentials between zero-emission, hybrid and internal combustion engine (ICE) cars.