In recent years, the UK Government has introduced a range of incentives to accelerate the adoption of ultra-low emission vehicles (ULEVs). This afternoon, the Labour Government delivered its second Autumn Budget. Chancellor Rachel Reeves outlined measures aimed at strengthening the UK economy while supporting consumers, local authorities, and the automotive industry through the transition to electric vehicles (EVs).

Electric Car Grant Extended

The Electric Car Grant, launched in July 2024, has already helped more than 35,000 drivers move to electric by offering up to £3,750 off eligible models. Recognising its success, the Government is expanding the scheme with an additional £1.3 billion in funding and extending it through to the 2029–30 financial year.

Increase to the Expensive Car Supplement for EVs

From 1 April 2026, the threshold at which new zero-emission vehicles become subject to the VED Expensive Car Supplement will increase from £40,000 to £50,000. This change will save more than a million motorists around £440 per year and will apply to Zero Emission Vehicles registered from 1 April 2025 onwards.

Electric Vehicle Excise Duty (eVED)

The Government is introducing Electric Vehicle Excise Duty (eVED), a new mileage-based charge for electric and plug-in hybrid cars, effective from April 2028. Drivers will pay on a per-mile basis alongside existing Vehicle Excise Duty.

Electric cars will be charged at half the fuel duty equivalent for petrol and diesel vehicles, set at 3p per mile. Plug-in hybrid cars will pay a reduced rate equal to half of the EV rate, at 1.5p per mile.

A consultation outlining how eVED will operate and inviting feedback is now open, closing on 18 March 2026.

Vehicle Excise Duty for cars, vans and motorcycles

Vehicle Excise Duty rates for cars, vans and motorcycles will increase in line with RPI from 1 April 2026.

Review of Public Charging Costs

The Government will review the cost of public EV charging, assessing the influence of energy prices and other contributing factors, as well as potential options to reduce costs for consumers. This review will begin in Q1 2026 and conclude by Q3 2026.

Changes to Fuel Duty

The government has extend the temporary 5p fuel duty cut for a further five months, with the cut being reversed in three stages:

• 1p on 1 September 2026, 2p on 1 December 2026
• 2p on 1 March 2027 (returning rates to pre-March 2022 levels)

The planned inflation increase for 2026-27 will not take place, with the government uprating fuel duty rates by Retail Prices Index (RPI) from April 2027.

Businesses

Business rates 100% relief for eligible electric vehicle charging points 

The Government will introduce a 10-year 100% business rates relief for EV chargepoints separately assessed by the Valuation Office Agency, as well as for electric vehicle-only forecourts, ensuring they incur no business rates liability.

Company car tax and Employee car ownership schemes

At Autumn Budget 2024, the Government announced plans to bring employee car ownership schemes (ECOS) within the scope of Benefit in Kind rules from 6 April 2026. To give the sector more time to adapt, implementation has been delayed to 6 April 2030, with transitional arrangements running to April 2031.

Plug-in hybrid electric vehicle (PHEV) tax easement

The Government will introduce a temporary Benefit in Kind easement for PHEVs to prevent significant tax increases arising from new emissions standards. This easement will apply from 1 January 2025 to 5 April 2028.

Capital allowances

First year 100% allowances for zero emission vehicles (ZEVs) and chargepoints

The Government will extend the 100% first-year allowances (FYA) for qualifying expenditure on zero-emission cars and on plant or machinery for EV chargepoints. These allowances will now run until 31 March 2027 for corporation tax and 5 April 2027 for income tax purposes.

National Living and Minimum Wage Increases

This Budget has confirmed there will be an increase in National Living and National Minimum Wage from 1 April 2026:

• National Living Wage for those ages 21+ increases by 4.1% to £12.71 per hour (approx £24,784.50 per annum for a full time worker)
• National Minimum Wage for 18-20 year olds will also increase by 8.5% to £10.85 per hour
• National Minimum Wage for 16-17 year olds and apprentices by 6.0% to £8.00 per hour.

If your company participates in our EV Salary Sacrifice Scheme ,it’s important to ensure that the total amount sacrificed,both for existing vehicles and any new agreements—does not reduce an employee’s pay below the National Living Wage.

National Insurance, Income Tax and Student Loans

The Government will freeze key tax and National Insurance thresholds for several years to provide stability and certainty for employees, employers and graduates, with Personal tax thresholds and the National Insurance secondary threshold will remain unchanged from 2028 to 2031.

• The National Insurance Primary Threshold (PT) and Lower Profits Limit (LPL) will stay at £12,570 from April 2028 to April 2031.

• The Upper Earnings Limit (UEL) and Upper Profits Limit (UPL) will remain at £50,270 over the same period, along with employer NICs relief thresholds aligned to the UEL.

• The employer Secondary Threshold for National Insurance will stay at £5,000 per employee from April 2028 to April 2031.

• Plan 2 student loan repayment threshold will be fixed from 2027–28 to 2029–30.

Changes to Salary Sacrifice (Pensions only)

The Government will apply employer and employee NICs to pension contributions above £2,000 per year when made through salary sacrifice. This will take effect from 6 April 2029. There are no proposed changes to EV salary sacrifice schemes.

Infrastructure and Investment

Local authority chargepoint capability funding

The Government will allocate £100 million to local authorities and public bodies to accelerate the installation of chargepoints in places where people live and work.

Cross pavement EV charging

The Department for Transport (DfT) will publish a consultation on permitted development rights for EV charging to speed up the rollout of cross-pavement charging solutions, making EV charging more convenient, affordable and accessible across England.

Drive35

To support the UK automotive manufacturing sector, the government has extended funding for the Drive35 programme, allocating a further £1.5 billion to 2035 and taking total funding to £4 billion over the next 10 years.

The rates and allowances mentioned are based on the 2025 Autumn Budget from HM Treasury and are for information purposes only. Lease Electric recommends consulting your Financial Advisor or Accountant and seeking professional advice and guidance before making any decisions.