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The Autumn Budget was announced on Wednesday. Here’s how it affects the automotive sector.
Fuel duty
The government has extended the fuel duty freeze, keeping it at 52.95p per litre for at least another year. This preserves the existing 5p cut brought in by the Conservative Government in 2022.
The decision is hoped to help motorists during difficult cost-of-living circumstances and has been welcomed by large parts of the automotive sector.
Road tax
With the £0 VED incentive for electric vehicles (EVs) ending next year, the government has decided to increase first-year Vehicle Excise Duty (VED) rates for petrol, diesel and hybrid cars starting in April 2025.
The government says the adjustments aim to “strengthen incentives to purchase zero emission and electric cars” by “widening the differentials between zero emission, hybrid and internal combustion engine (ICE) cars.”
Notably, cars emitting between 1-50g/km of CO2, which includes most hybrids, will see first-year rates rise significantly from £10 (£0 for hybrids) to £110. For cars in the 51-75g/km range, the rate jumps from £30 (£20 for hybrids) to £135. First-year rates for cars with higher emissions will also double.
After the first year, standard VED rates will adjust with the Retail Price Index (RPI). The government has also signalled potential changes to the Expensive Car Supplement to incentivise EVs in the future. Presently, cars priced above £40,000 incur an additional £410 annually five years after registration.
Company car tax
Benefit-in-Kind tax rates for company cars will stay at 2% for EVs until 2026.
From April next year, double-cab pick-ups will be categorised as cars for purposes like capital allowances, Benefit-in-Kind, and business profit deductions.
Infrastructure investments
The government has allocated £200 million to expand EV charging infrastructure. £500 million has also been earmarked for road maintenance which will help fix an extra million potholes annually.
An additional £2 billion will support the UK automotive industry in electric vehicle advancements.
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