The UK Chancellor John Healey has delivered the UK’s Autumn Budget today, and there’s plenty of changes on the automotive side. Most headlines are focusing on the extended freeze to fuel duty rising, but there are also some positive signs for cheaper EV ownership – particularly for those unable to charge at home. But, do the changes go far enough?
How does the Autumn Budget affect EV ownership in the UK?
Reduced public charging costs – in certain locations
From April 2027, the government will allocate £100 million over two years towards reducing prices of low-power public chargers located near peoples’ homes. Typically, these are the types of chargers that will be used by people unable to charge on a private driveway or off-street location, so a reduction in costs per kWh here could help more people be convinced to go electric even if they don’t have or are unable to get themselves a private domestic charging solution. The government expects the scheme to save an EV driver who relies on on-street charging around £150 a year on average. It’s worth noting this isn’t a fund for installing new chargepoints, and the Department for Transport has yet to set out exactly how it will work.
In addition, the government will also implement a previous recommendation to implement a ‘tariff forwarding’ scheme, which would see drivers able to charge at certain public chargers using the same kWh rate that their home energy tariff uses. It remains to be seen, however, how expansive such a scheme would be.
Despite repeated calls from many in the EV industry, the budget hasn’t cut VAT on public charging, which still stands at 20%. That compares with the temporary 0% rate currently applied to domestic electricity, which is normally 5%. It also comes after the government appealed against a tax tribunal ruling earlier this year which found public charging should qualify for the lower 5% rate. There was better news for those charging at home though, with the 0% VAT rate on domestic electricity, introduced on 1 October, now being extended until July 2027.
Contentious pay-per-mile tax to remain for EVs
Last year, the government announced plans to introduce an ‘electric Vehicle Excise Duty’ (eVED) which would see plug-in hybrids (PHEVs) and fully-electric models (BEVs) taxed in a completely different format to their petrol and diesel counterparts, from April 2028. This timeline remains unchanged in the latest budget, with charges of 3p per mile for BEVs and 1.5p per mile for PHEVs.
The government’s reasoning for this scheme is to recoup fuel duty which is forecast to fall as more drivers make the switch to electric, so it’s understandable that the government needs to claw that lost revenue back somehow. However, it seems premature when the government is still yet to convince a majority of car buyers to choose a fully-electric car. And, for high mileage EV drivers, it could cause the annual tax bill to exceed that of a petrol or diesel model.
The EV industry reacts
These are some of the comments we’ve seen today from key figures and organisations within the UK’s EV sector:
Shane Brennan, Chief Executive of ChargeUK, commented:
“Today’s announcements on the cost of EV charging will do serious damage to the EV transition. Instead of listening to the call of EV drivers for fairness on VAT the government has slammed the door shut on ending a rank unfairness between at home and out of home charging. An unfairness that even the courts ruled to be illegal earlier this year. Meanwhile its cost of public charging review recommendations do not meet the moment – too little, too complex and too slow to make a meaningful difference. The industry asked for simple measures to address the foundational cost issues for public charging – VAT, soaring operator standing charges, and renewable fuel credits. The review recommends action on the latter point but overall amounts to warm words and an open ended taskforce not meaningful action.
Taken alongside extended fuel duty cuts and the potential weakening of EV targets, it paints a picture of a government which is unserious about helping millions of drivers save by switching to electric. Hard work will now be required to rebuild trust and confidence across the EV charging sector. We will work urgently to understand how government intends to keep the zero emission transport transition on track.”
Dr Vicky Edmonds, CEO of EVA England, commented:
“Electric cars are already delivering cheaper motoring for many drivers across the UK. But for people who cannot afford the upfront cost or don’t have a driveway to charge at home, those savings are currently out of reach. We therefore strongly welcome and support the recommendations of Philip New, the Chair of the Government’s Cost of Charging review, to deliver a way for drivers who don’t have access to private charging to access their domestic energy tariffs from the public charging network.
This will be absolutely necessary if we are to open up electric cars as an option for all driving households. Of course, such complex structural change takes time, so we also welcome the £100m financial support for some households to access cheaper public charging. Equalisation of VAT between domestic and public charging would have been another, welcome interim measure and it is disappointing that we still see no movement from Government on that.”
Graham Conway, Managing Director of Select Car Leasing, added:
“Drivers will breathe a huge sigh of relief that the Chancellor has listened to concerns from motorists and put the brakes on January’s planned fuel duty rise, while retaining the 5p-per-litre cut. With diesel prices sitting around £2 a litre and petrol not far behind, hiking duty this winter would have been a real kick in the teeth for motorists who rely on their vehicles. For many people a car or van isn’t a luxury, it’s part of their job, how they do the school run, or look after elderly relatives – among countless other essential tasks.
Those households have been absorbing record prices at the pumps since the conflict in the Middle East sent the cost of oil soaring and many will have run out of wriggle room in their own personal budgets. It’s also worth remembering the Treasury is on course to bank a hefty windfall in extra VAT from higher fuel prices in general, so this was a decision the Chancellor could arguably afford to make. But this is only a temporary relief. The 5p cut has now been extended time and again, and at some point the bill will come due.
The best advice is to use this bit of breathing space wisely by shopping around for the cheapest prices at the pumps while really assessing your vehicle options – particularly whether you could switch to an EV or hybrid. We know from our own research that running an EV over the course of a year and 10,000 miles could help you save more than £1,000 compared with a traditional petrol or diesel car, when you charge at home. You can save even more than that if you have access to a low off-peak energy tariff. We understand the reticence from some when it comes to EVs and they won’t be feasible for all, but with more and more affordable EVs joining the leasing market, it’s an option that many drivers will already be exploring.”
