What does the spring budget mean for EV drivers?

17 Mar

This image is sourced from Driving Monitor

On Wednesday (15th March 2023) the Chancellor of the Exchequer, Jeremy Hunt, announced the spring budget 2023. So what does this mean for drivers?

There was no “new news” affecting electric car salary sacrifice. So, here is a recap of the announcements from the Autumn statement.

Benefit in Kind tax

Benefit-in-kind (BIK) rate is a tax that is charged for company benefit, in this case the benefit is an electric car at a heavily discounted price.

From HMRC’s perspective, this is different or supplementary to your gross salary, therefore seen as an additional benefit – hence the BIK tax. The benefit in kind tax is currently low at 2% to encourage the use of electric cars.

In the Autumn statement 2022, Jeremy Hunt announced that the Benefit in tax will remain at 2% till 2025 and then rise by 1% yearly until 2028 when they will review next steps.

Higher Tax rate (45%) starting from £125,140 gross income

In the Autumn Statement 2022, the chancellor also announced the 45% higher rate of tax will now be payable from £125,140 as opposed to the current £150,000. Whilst this may result in less cash in your employees bank accounts, it does mean that those who are now on the top rate of income tax can save even more with The Electric Car Scheme.

You can get an accurate quote for your chosen car, lease and level of income using our handy tax saving calculator on our website.

Road Tax for EV drivers from 2025

As confirmed in the Autumn Statement, electric cars are still not subject to road tax charges until 2025. From 2025, electric car drivers will begin paying road tax - this includes drivers with cars from The Electric Car Scheme. This tax will typically be included in new leases.

Pothole funding

A further £200 million is being made available to fix damaged roads and reduce the impact of potholes - which we’re sure will be welcomed by all road users!

How do these changes affect The Electric Car Scheme?

Overall, this is great news for both employers and employees with The Electric Car Scheme! It means our employee benefit will continue to provide you with the most affordable way to lease an electric car beyond 2025, all the way through to at least 2028 - and hopefully beyond.

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Gaurav Ahluwalia

Gaurav, The Electric Car Scheme's Marketing Director, is a seasoned marketing leader with nearly a decade of experience in the Electric Vehicle (EV) industry. Throughout his career, Gaurav has not only honed his marketing skills but has also delved deep into the realm of electric cars, cultivating a wealth of valuable insights and innovative perspectives that make him a prominent figure in the field.