THERE was heartening news in the Chancellor’s Autumn Statement (17 November 2022) for SME fleets.
Rates of company car tax benefit in kind tax are rising modestly for electric cars.
From April 2025, benefit in kind rates for electric cars will increase by 1% annually to a maximum of 5%.
The same increases are also in place for ultra-low emission cars emitting less than 75g per kilometre – in other words, most plug-in hybrid cars.
So a Range Rover plug-in hybrid will be taxed at just 13% in five year – offering up many more years of Range Rover driving for SME CEOs.
Rates for all other bands will increase by 1% (up to a maximum of 37%) in 2025/26, and will then be frozen for the next two years.
The rates for electric car company car tax will also ensure that salary sacrifice remains a popular choice.
VED Introduced For Electric Cars
Of course it wasn’t all glad-handing. The Chancellor took the opportunity to introduce Vehicle Excise Duty (VED) for electric cars.
From April 2025 electric cars and vans will be subject to VED in the same way as petrol and diesel vehicles. But the expensive car supplement for cars over £40,000 will only apply to electric cars registered from 01 April 2025, with zero emission cars registered before April 2025 continuing to be exempt.
This was the downside to the Autumn statement, said Paul Hollick, chair of the Association of Fleet Professionals.
While the addition of VED will add to the whole life costs of electric cars, in Jeff Whitcombe’s opinion, electric cars would remain better on the cost cycle:
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