Last week the Chancellor, Rishi Sunak, announced the spring budget for 2020. Along with measures to reduce the economic impact of coronavirus and increase public sector spending, he also announced a number of measures that will affect our roads and vehicle choices.
After a few months of uncertainty over the plug-in grant, the chancellor confirmed that this will continue to be offered until 2023 with £532 million going to fund this. However, there is a reduction for car buyers from the previous £3,500 by £500. If you are eligible for the grant you could now only receive up to £3,000.
New restrictions mean you will now be unable to apply for a grant if your electric car has a purchase price of over £50,000. When asked by the BVRLA the Office for Low Emission Vehicles has advised that this is the price paid by the customer not the recommended retail price and would include the number plates, vehicle excise duty (also known as VED or road tax), and VAT. It excludes any optional extras, delivery charges, and the first registration fee. They also advised that any discount on the vehicle must be applied to the purchase price before the application of the plug-in grant.
Grants for electric vans, trucks, taxis and motorbikes remain at the same levels.
As well as providing funds to help you get an electric vehicle the chancellor has also committed to improving the road and electric charging infrastructure.
Speaking on Wednesday the Chancellor announced £500 million over the next five years to improve the charging network across the UK so that you are never more than 30 miles away from being able to charge your electric vehicle. This includes a rapid charging fund which will help businesses with the cost of connecting fast charging points to the electricity network.
The government will also be investing in our roads with £27 billion going towards projects like the A303 bypass tunnel, improving the A66 in the North East and the Lower Thames Crossing in the South East. An additional £2.5 billion will also be spent on pothole repairs over the next five years.
The vehicle excise duty (VED) surcharge has been removed from fully electric vehicles until the 1st of April 2025. This means that on fully electric vehicles costing over £40,000 you will not have to pay the £320 surcharge that was previously applicable.
The Chancellor has also put out a call for evidence on VED, to look at three areas; reforming the first licence rates, greening VED after the first registration and any further scope to change VED rates.
As part of the budget, the chancellor also announced that the company car tax will remain at the same rates that have been announced for 2022-23 until 2024-25.
Capital allowances for businesses will be reduced and now only zero-emission vehicles qualifying for 100% for the first year. The threshold for the main rate of 18% has now been reduced to 50g/km CO2 and anything over that could be eligible for the special rate of 6%. These rates will come into effect from April 2021.
Other measures that were announced include freezing the fuel duty at the current rate for the 10th consecutive year, and investment of £300 million into nitrogen dioxide emission reduction across the country in our town and city centres.