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UK Electric Car Subsidies to End

 In Blog, Blogs

The UK government has now ended the £300-million plug-in car grant scheme, leaving the UK as the only big European country without electric car incentives. In stark contrast to the European Parliament ruling banning combustion engines from 2035, the UK government has now stopped any further financial support in surging electric car sales.

In a controversial and disappointing move, the government will relocate the funds to improving public electric charge point infrastructure. Battery-powered and hybrid electric vehicles (EVs) now make up more than half of new car sales, with the sale of fully electric cars having risen by 70% in the last year alone. Electric car sales dwindled around 1,000 units in the year 2011, compared to almost 100,000 units in the first half of 2022. The plug-in grant has clearly succeeded in helping to increase the sale of fully electric cars in the UK.

The Society of Motor Manufacturers and Traders argues that such a move sends the wrong message to motorists and is at odds with the government’s ambitions for net zero . Without ongoing subsidies, lower-income households could be held back from embracing the electric revolution, leading to class divides between those who think green and those who are left using outdated combustion engines.

Bringing affordability and accessibility to electric vehicles will be key in hitting those zero-emissions targets and convincing the nation of the importance of making the switch to greener modes of transport. As the now-scrapped government grant was the last public incentive in accessing subsidised electric cars, questions arise how the nation can meet targets for a greener future, when options are taken off the table.

Interestingly, the government have announced the next phase in the grant scheme, with a series of low-emission vehicles eligible for a plug-in grant. These vehicles – while no longer including cars – range from wheelchair accessible vehicles, motorcycles, mopeds, small and large vans, taxis and small and large trucks. Not all low-emission vehicles are eligible for the grant and eligibility must be pre-approved by the government; there is a list of approved makes, models and specifications on the government website. There is also a government grant which covers 75% of the cost of installing an electric vehicle charging point at home. So, while the government decision to pull the plug on the electric car subsidies might seem initially detrimental to the UK public, a closer look shines the light on a whole fleet of vehicles now eligible for financial support from the government. Perhaps bringing all types of vehicles – ranging from motorcycles to large vans – towards zero emissions could prove a more sustainable goal overall; scrapping the plug-in grant for cars and focussing on all other combustion engines may support the UK goals towards net zero in-line with Europe after all.

As well as being cleaner, greener and better for the environment, electric vehicles boast tax incentives for individuals and businesses alike. 

Depending when the car was manufactured- and taking into account whether it has hybrid or ‘pure’ status- electric vehicles can range from between £135 right down to £0 for annual vehicle ‘road’ tax. Alongside the potential savings on annual road tax, companies can also benefit from both Capital allowances and from a ‘benefits in kind’ (BiK) tax rate, making electric vehicles an attractive prospect for businesses looking to boost pre-tax profits and make savings wherever possible.

Ultimately, the biggest saving for businesses using electric vehicles can be found in the exemption from congestion charges. Whether commuting in and out of London or frequenting ‘clear air zones’, EVs are totally exempt from these charges due to their zero emissions status.

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