Autumn Statement 2024: How is EV Salary Sacrifice Affected?
The Chancellor of the Exchequer, Rachel Reeves, delivered Labour’s first Autumn Budget alongside the latest economic forecast yesterday. In the lead-up to this announcement, Prime Minister, Keir Starmer, warned that the budget would be “painful” for many, asking the country to “accept short-term pain for long-term good.”
Good news! Salary sacrifice remains the best and most cost-effective way to get into an electric car. The government has demonstrated a long-term commitment to supporting the UK’s transition to net zero through favourable legislation.
This article will outline everything you need to know about the 2024 Autumn Statement, including the implications it may have on your business and what it means for electric car salary sacrifice schemes in the UK.
Changes To Benefit-In-Kind Tax
In the statement, Reeves made it clear that Labour ‘want to support the take-up of electric vehicles’, so she has extended the incentives for electric vehicles, until at least 2030.
In the 2023 Autumn Statement, Jeremy Hunt announced that the Benefit-in-Kind (BiK) tax will remain at 2% until 2025 and then rise by 1% every year thereafter until it reaches 5% in 2028. This was set low to encourage the adoption of electric cars and ultimately enables drivers to save between 30-60% through salary sacrifice.
Reeves confirmed that starting April 2028, the Benefit-in-kind (otherwise known as Company Car Tax) rates for company cars will increase. This is in line with the government’s aim to provide long-term certainty for taxpayers and the industry. BiK rates will continue to strongly incentivise EV adoption, while rates for hybrid vehicles will be increased to align more closely with rates for petrol and diesel cars.
This means the BiK rate for electric vehicles will increase by 2 percentage points per year in 2028-29 and 2029-30, rising to 9% in 2029-30.
BiK rates for hybrid vehicles or cars with emissions of 1-50g of CO2 per kilometre will rise to 18% in 2028-9 and 19% in 2029-30.
The rates for all other vehicles will increase by 1 percentage point per year to 38% in 2028-29 and 39% in 2029-2030.
The table below shows these changes for different types of cars depending on their CO2 emissions. You can see how much the company car tax scale will increase as time goes on.
| undefined | Zero Emission Mileage | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 |
|---|---|---|---|---|---|---|---|
| 0 | 2% | 3% | 4% | 5% | 7% | 9% | |
| 1-50 | >130 | 2% | 3% | 4% | 5% | 18% | 19% |
| 1-50 | 70-129 | 5% | 6% | 7% | 8% | 18% | 19% |
| 1-50 | 40-69 | 8% | 9% | 10% | 11% | 18% | 19% |
| 1-50 | 30-39 | 12% | 13% | 14% | 15% | 18% | 19% |
| 1-50 | <30 | 14% | 15% | 16% | 17% | 18% | 19% |
| 51-54 | 15% | 16% | 17% | 18% | 19% | 20% | |
| 55-59 | 16% | 17% | 18% | 19% | 20% | 21% | |
| 60-64 | 17% | 18% | 19% | 20% | 21% | 22% | |
| 65-69 | 18% | 19% | 20% | 21% | 22% | 23% | |
| 70-74 | 19% | 20% | 21% | 21% | 22% | 23% | |
| 75 | 20% | 21% | 21% | 21% | 22% | 23% | |
| 100 | 25% | 26% | 26% | 26% | 27% | 28% | |
| 150 | 36% | 36% | 36% | 37% | 38% | 38% |
This means that tax savings available through The Electric Car Scheme will continue until 2030 and beyond, ultimately meaning EV salary sacrifice will continue to be the best way of getting into an EV.
Employers National Insurance Contributions
Labour have repeated their manifesto pledge that they will not raise taxes on working people. Reeves confirmed there will be no increase to basic, higher or additional rates of Income tax, National Insurance Contributions (NICs) or VAT.
Rachel Reeves has confirmed the new Labour government will increase Employer National Insurance (NI) by 1.2 percentage points from 13.8% to 15%, and the threshold at which businesses start paying Employer National Insurance on a worker’s earnings will be lowered from £9,100 to £5,000. This is in an attempt to plug the £22 billion ‘black hole’ in the UK’s finances.
The government will continue to support small businesses with these changes, by increasing the Employment Allowance from £5,000 to £10,500 and removing the £100,00 threshold, expanding this to all eligible employees, This means that 865,000 employers will pay no National Insurance Contributions next year.
For some context, in 2023-24, employer NI contributions raised £109 billion and employee contributions raised £60 billion. It is estimated that a 1% increase to 14.8% could reap the Treasury between £8 and £9 billion. Increasing employer NI contributions could have a fallout effect on workers because companies may lower wage rates or even reduce hiring due to the associated costs.
Companies signed up to The Electric Car Scheme do not need to take any action, as your fee from The Electric Car Scheme will be updated automatically. It is important to remember that The Electric Car Scheme remains a cost-neutral benefit for your company!
Fuel Duty
It was announced in the Statement that the government will continue to freeze fuel duty and extend a 5-pence cut for one year to support families and businesses. This is expected to save the average car driver £59 in 2-25-26.
This was predicted to increase in the Statement, which would have directly impacted the wallets of petrol and diesel drivers whilst bolstering reasons to consider switching to an EV.
Public Charge Point Infrastructure
Labour's pledge to support rapid expansion of EV charging networks could translate into increased funding for public charging points, tax incentives for workplace installations, and support for local authorities to boost on-street charging options. This approach aims to address 'charging deserts' and create a more equitable nationwide distribution.
In the Autumn Statement, Labour will invest over £200 million in 2025 and 2026 to accelerate EV chargepoint rollout. This will include funding to support local authorities to install on-street chargepoints across England. This has been designed to build on the UK’s existing charging network, which continues to grow rapidly with over 700,000 public charge points currently.
VED And Road Tax
Beginning April 1, 2025, the government will adjust the VED First Year Rates for new cars to encourage the purchase of zero-emission and electric vehicles. These changes will widen the rate differences between electric vehicles and hybrid/ICE (internal combustion engine) vehicles.
Here’s what was laid out in the Autumn Statement. These changes will come into effect from the 1st of April 2025.
Zero-emission cars will pay the lowest first-year rate at £10 until 2029-30,
Rates for cars emitting 1-50 g/km of CO2 including hybrid vehicles will increase to £110 for 2025-26,
Rates for cars emitting 51-75 g/km of CO2, including hybrid vehicles, will increase to £130 for 2025-26,
All other rates for cars emitting 76 g/km of CO2 and above will double from their current level for 2025-26.
How The Changes Affect Your Vehicle
Electric and Low-Emission Vehicles Registered on or After April 1, 2025
First-year tax: Pay the lowest rate (for vehicles with CO₂ emissions of 1-50g/km).
Following years: Pay the standard rate, currently £190 (subject to 2025 update).
Vehicles Registered from April 1, 2017, to March 31, 2025
Based on previous guidance this will be £190 per year for electric vehicles registered between the 1st of April 2017 and 31st of March 2025. We expect confirmation on this at a later date.
Vehicles Registered from March 1, 2001, to March 31, 2017
Move to the first band with a VED rate, currently £20 (subject to 2025 update).
What Does This Mean For The Electric Car Scheme Customers?
If you lease a car through a salary sacrifice scheme, such as The Electric Car Scheme, you will have to pay £10 for the first year if your car is registered after the 1st of April. All new quotes will have road tax already included in the price. After that, you will then need to pay £190 per year. If you’re a customer of The Electric Car Scheme, this will be taken from your gross salary. If you do salary sacrifice this cost, you will save £57 per year.
For employees whose existing lease agreement DOES NOT include the cost of road tax, these fees can be sacrificed from the employee’s gross salary as a lump sum on the month of the vehicle’s registration anniversary from April 2025.
Pay-per-mile Road Tax System Will Not Be Introduced
UK drivers currently pay a flat yearly rate of £190 for road tax after the first year—this is based on the car’s CO2 emissions. Electric vehicle drivers have not had to pay road tax, but from April 2025, they will become subject to it. A pay-per-mile policy was the subject of speculation leading up to the Statement and would mean drivers pay a fee based on the distance they travel, rather than the flat £190 per year based on emissions.
Labour has decided not to introduce a pay-per-mile system in the UK, stating that they are committed to supporting the automotive sector as the UK transitions to EVs to meet the legally binding climate requirements.
Changes To Energy Profits Levy
The Energy (Oil and Gas) Profits Levy (EPL) was introduced in May 2022 to the tax of extraordinary profits of oil and gas companies operating in the UK. One of the Labour government’s key missions is to make the UK a clean energy superpower and to achieve that they believe it is essential for the Oil and Gas companies to contribute. This levy is currently set at a rate of 35%. The government has announced that this rate will increase to 38% as well as removing the 29% investment allowance, and extending the time the levy applies until March 2030.
This will raise more money from oil and gas companies which the government can then use to fund support for households who are facing rising energy bills. Increasing the EPL will also affect jobs and investment negatively.
Green Economy Growth Plans
The green economy experienced significant growth in 2023, expanding by 9% compared to just 0.1% growth in the rest of the economy. However, the UK must further invest in renewable energy sources to sustain and build on this momentum. The Labour government has committed to moving away from fossil fuels and achieving a fully clean power system by 2030. To meet this target, they emphasise the need for rapid wind and solar power expansion, supported by flexible demand and enhanced storage solutions. They did not announce anything new in the Autumn Budget
Thom Groot, CEO and Co-Founder of The Electric Car Scheme has commented on the first Labour Autumn Statement:
"Ignoring fuel tax in the Budget is a huge mistake. We are 14 years overdue for a fuel tax increase, and the subsidising of fossil fuels needs to end if we are to reach our Net Zero and ZEV targets. The £100bn this freeze has cost the treasury so far, invested properly, could have been transformative to the NHS, infrastructure or just the national debt and there is no excuse for extending it.
"This money could be far better spent on levelling the playing field for EV drivers charging in public by cutting VAT to 5%, which would cost just £14mn. The £20bn black hole that has dominated headlines cannot be filled at the cost of the Net Zero transition, it would be madness to do so. Not to mention the cost to the NHS of poor air quality and extra funding freed up by ending this subsidy. Introducing a levee on aviation fuel would also increase the tax take and help tackle climate change."
Offering an electric car scheme to employees is an excellent way to attract and retain top talent, helping your team feel valued and supported in their roles. Choosing The Electric Car Scheme comes at no cost to set up or run for the company while also supporting your sustainability goals. Learn more by visiting our website here.
