The Key Motoring Implications from the Autumn Budget 2024

After extensive media speculation, the Autumn Budget announced on October 30th provided clarity on the broad areas of spending, tax and other budgetary developments. Some of those will impact vehicle purchases and running costs. Here is our summary of the main changes.

Petrol and Diesel News - Fuel Duty

While many commentators had forecast that the 5p cut in petrol and diesel fuel duty introduced in March 2022 would be scrapped, it didn't happen. So, the current rate of 52.95p per litre will be retained through 2025-2026.

A Focus on Fully Electric Vehicles

The budget's primary focus on cars was promoting zero-emission electric vehicles (ZEVs), with confirmation of the government’s plan to reintroduce the?ban?on the sale of new internal combustion engines (ICE) petrol and diesel cars from?2030.

Vehicle Excise Duty (VED) – sometimes known as road tax or road fund licence

From April 2025, standard VED rates will increase by the rate of inflation, but there will be a significant rise in the cost of the first-year VED for new cars, designed to create a further financial push to get new car buyers to choose a ZEV. The first-year VED will double if it emits more than 75g per kilometre of CO2.

Currently, no new petrol or diesel cars are on sale that achieve the 75g target, and most ‘self-charging' hybrid vehicles will also fall short of it. The result will be a first-year VED cost of between ￡270 and a staggering ￡5,490. From a car's second year, all models will be subject to a standard rate of VED.

The Expensive Car Supplement

The expensive car supplement is?paid in addition to the standard rate for five years?from the start of the second vehicle licence. Currently, it applies to all new petrol/diesel cars costing over ￡40,000, adding an additional ￡410 a year to the cost of running the car.

From April 1st 2025, EVs are scheduled to pay VED for the first time, and any that cost over ￡40,000 would also be liable for the Expensive Car Supplement. The Chancellor announced that the government would consider raising the threshold for ZEVs, but not hybrid vehicles, at a future fiscal event “to make it easier to buy electric cars”.

Benefit in Kind (BIK) Development

The benefit-in-kind (BIK) tax incentive for purchasing new ZEVs is set to remain. Company car BIK tax rates will stay in place beyond 2028; the appropriate percentages for ZEVs will rise by two per cent for 2028/29 and 2029/30, increasing to 7% and 9%, respectively. This move will continue to support the purchase of new company car ZEVs and salary sacrifice schemes.

However, company car drivers of plug-in hybrid electric vehicles (PHEVs) face an increase in their BIK from 2028/29 of up to 13%, with zero-emission mileage being dropped as a differentiator.

100% First Year Allowances

The Chancellor extended the availability of the 100% first-year allowances ZEVs and the 100% first-year allowance for qualifying electric vehicle charge-points to?31 March 2026 for Corporation Tax purposes.

Support for Private New and Used Car Buyers

Apart from the continued support for ZEV-related salary sacrifice schemes and despite lobbying calls to support private buyer demand for used electric vehicles (EVs), either new or used or to equalise VAT on public and home charging, no changes were announced.