Getting Started: Financial Support for Electric Cars
If you’re considering an electric car, then there are a number of incentives available to make that switch more affordable.
Although economies of scale are closing the gap, electric vehicles (EVs) are often pricier than their internal combustion engine (ICE) counterparts – and it’s a stumbling block as households face high interest rates and rising living costs. Almost two thirds (62%) of buyers surveyed by the National Franchised Dealer Association said prices were stopping them from going electric, despite 42% recognising they could reduce other running costs by doing so [1].
The UK Government, with its sights set on phasing out new petrol, diesel and hybrid cars by 2035, still provides financial support to help drivers switch to EV. We’ve outlined the most important schemes below.
Is grant funding still available for electric vehicles?
Yes, but the scope is limited. The Plug-in Car Grant was withdrawn in 2022 [2], but there is still funding available for wheelchair-accessible vehicles. This provides up to 35% towards the list price (including optional extras, VAT and delivery) of a new vehicle, capped at £2,500 [3].
Eligible vehicles must:
- Emit 0g/km CO2 at the tailpipe
- Offer an electric range of at least 70 miles
- Have a list price of £35,000 or less
Can I get a grant towards a home charging point?
Yes, but again it depends on your situation. Drivers who own, lease or are the primary user (e.g. company car driver) of an eligible plug-in hybrid or electric vehicle, and live in a flat or rental property are still eligible for grant funding. This covers up to 75% (capped at £350, including VAT) of the equipment and installation costs [4].
In March 2024, the scheme was extended to include owned or rented properties without off-street parking – albeit with a more complicated process for gaining permission [5].
For more information about chargepoint grants, see our detailed guide: Getting Started: An Introduction to Home Electric Vehicle Charging
How much does road tax cost for an electric car?
HM Revenue and Customs introduced a new Vehicle Excise Duty (VED, or ‘road tax’) system in April 2017 [6], with discounts for cars with low CO2 emissions.
- The First Year Rate is a one-off payment for new cars, included in the ‘On the Road’ price and weighted based on CO2 emissions to incentivise the most efficient models. A £10 reduction applies for hybrids, while electric vehicles are exempt.
- The Standard Rate is paid annually. This is a flat rate of £190 for petrol or diesel cars or £180 for hybrids, regardless of CO2 emissions. Electric vehicles are exempt.
- A £410 Expensive Car Supplement applies on top of the Standard Rate for cars with a list price of £40,000 or more, payable during the first five years on the road. The only exception is ‘zero-emission’ vehicles – including electric and fuel cell models.
Current rates for low-CO2 vehicles are as follows [7]:
CO2 emissions | First Year Rate | Standard Rate (list price <£40,000) | Standard Rate (list price >£40,000) |
|---|---|---|---|
0g/km | £0 | £0 | £0 |
1-50g/km | £10 (£0) | £190 (£180) | £600 (£590) |
51-75g/km | £30 (£20) | £190 (£180) | £600 (£590) |
However, those incentives are temporary. From 1 April 2025, rates will be equalised across all vehicles [8], which means:
- A CO2-weighted First Year Rate for new registrations, removing the exemption for electric cars and the £10 discount for hybrids.
- A flat Standard Rate will apply to all vehicles registered since 1 April 2017, removing the exemption for electric cars and £10 discount for hybrids.
- The Expensive Car Supplement will apply to newly registered electric cars with a list price of £40,000 or more.
What are the tax incentives for electric company cars?
Drivers using a company-owned car for private journeys pay Benefit-in-Kind as part of their salary. This is calculated using a CO2-weighted percentage of the vehicle’s list price (or P11d), and their income tax band [9].
There are six bands for vehicles with CO2 emissions of 50g/km or less. This includes:
- A tiered system for plug-in hybrids (between 1g/km and 50g/km), with lower rates for models with a longer electric range.
- Ultra-low rates for electric vehicles (with 0g/km CO2 emissions) and plug-in hybrids with an electric range of 130 miles or more.
Rates increase by 1% point every April, but incentives for ultra-low emission vehicles will be in place until 2028 [10] – that’s long enough to cover a typical lease or finance arrangement.
Some examples of monthly payments are given below:
P11D | Rate | Benefit-in-Kind   20% | Benefit-in-Kind 40% | ||
Kia Niro EV '3' | £39,520 | 2% | £13 | £26 | |
Kia Niro Hybrid '3' | £32,335 | 26% | £140 | £280 | |
Volkswagen ID3 Pro Match | £36,505 | 2% | £12 | £24 | |
Volkswagen Golf Match 1.5 eTSI | £29,675 | 29% | £143 | £287 | |
Volvo EX40 Core Extended Range | £47,650 | 2% | £16 | £32 | |
Volvo XC40 Core B3 Auto | £35,995 | 35% | £210 | £420 |
Click here for a full list of company car tax bands.
Other Incentives to Go Electric
- Fuel costs: Electric vehicle 'fuel' costs are typically two to four times lower than a petrol or diesel equivalent, depending where they are charged. Find out more about how much an electric vehicle costs in our detailed guide, available here.
- Maintenance: Servicing an electric vehicle takes less time and uses fewer parts than a petrol or diesel engine, which cuts servicing and maintenance costs. Regenerative braking, using the electric motor, also saves wear on the brake parts.
- Charging at Work: If your employer provides charging points, there's no Benefit-in-Kind liability for topping up while you're at work.
- Clean Air Zones: Since 25 October 2021, only electric vehicles have been exempt from the £15 daily London Congestion Charge [9]. As cities across the country introduce clean air zones to improve air quality, going electric could be a safer option for avoiding future expense. To find out more about clean air zones, click here.
- Free Parking: Some councils offer discounted parking for electric vehicles, to encourage cleaner transport. Some also include cheap or free charging – the latter is becoming increasingly rare, but there is a filter on Zap-Map to help find them.
REFERENCES
[1] NFDA. (2023). Price is the main driver of automotive decisions in the UK. [online] Available at: https://www.nfda-uk.co.uk/press-room/press-releases/price-is-the-main-driver-of-automotive-decisions-in-the-uk [Accessed 31 May 2024].
[2] Department for Transport. (2022). Plug-in grant for cars to end as focus moves to improving electric vehicle charging. [online] Available at: https://www.gov.uk/government/news/plug-in-grant-for-cars-to-end-as-focus-moves-to-improving-electric-vehicle-charging [Accessed 31 May 2024].
[3] OZEV. (2022). Low-emission vehicles eligible for a plug-in grant. [online] Available at: https://www.gov.uk/plug-in-vehicle-grants/wheelchair-accessible-vehicles [Accessed 31 May 2024].
[4] GOV.UK. (2024). Electric Vehicle Chargepoint Grant for Renters and Flat Owners. [online] Available at: https://www.find-government-grants.service.gov.uk/grants/electric-vehicle-chargepoint-grant-for-renters-and-flat-owners-1 [Accessed 31 May 2024].
[5] GOV.UK. (2024). Electric Vehicle Chargepoint Grant for Households with On-Street Parking. [online] Available at: https://find-government-grants.service.gov.uk/grants/electric-vehicle-chargepoint-grant-for-households-with-on-street-parking-1 [Accessed 31 May 2024].
[6] Driver and Vehicle Licensing Agency. (2017). New vehicle tax rates from 1 April 2017. [online] Available at: https://www.gov.uk/government/news/new-vehicle-tax-rates-from-1-april-2017 [Accessed 31 May 2024].
[7] DVLA. (2023). Rates of Vehicle Tax for Cars, Motorcycles, Light Goods Vehicles and Private Light Goods Vehicles. [online] Available at: https://assets.publishing.service.gov.uk/media/6603f64b13397a0011e419be/v149-rates-of-vehicle-tax-for-cars-motorcycles-light-goods-vehicles-and-private-light-goods-vehicles.pdf [Accessed 31 May 2024].
[8] HM Treasury. (2022). Autumn Statement 2022. [online] Available at: https://www.gov.uk/government/publications/autumn-statement-2022-documents/autumn-statement-2022-html [Accessed 31 May 2024].
[9] HM Revenue & Customs. (2022). Company car benefit – the appropriate percentage (480: Appendix 2). [online] Available at: https://www.gov.uk/guidance/company-car-benefit-the-appropriate-percentage-480-appendix-2 [Accessed 31 May 2024].
[11] HMRC. (2024). Employment Income Manual: EIM23900. [online] Available at: https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim23900 [Accessed 31 May 2024].
[12] TfL. (n.d.). Discounts and exemptions. [online] Available at: https://tfl.gov.uk/modes/driving/congestion-charge/discounts-and-exemptions [Accessed 31 May 2024].
Important information:
This blog was originally published on leaseplan.com website. The views expressed may no longer be current and any reference to specific vehicles or products is for reference only. This information is not a personal recommendation for any particular vehicle, product or service - if you are unsure about the suitability of a product, you should consult with an expert.
Important information:
This blog was originally published on leaseplan.com website. The views expressed may no longer be current and any reference to specific vehicles or products is for reference only. This information is not a personal recommendation for any particular vehicle, product or service - if you are unsure about the suitability of a product, you should consult with an expert.
Important information:
This blog was originally published on leaseplan.com website. The views expressed may no longer be current and any reference to specific vehicles or products is for reference only. This information is not a personal recommendation for any particular vehicle, product or service - if you are unsure about the suitability of a product, you should consult with an expert.
Important information:
This blog was originally published on leaseplan.com website. The views expressed may no longer be current and any reference to specific vehicles or products is for reference only. This information is not a personal recommendation for any particular vehicle, product or service - if you are unsure about the suitability of a product, you should consult with an expert.
Important information:
This blog was originally published on leaseplan.com website. The views expressed may no longer be current and any reference to specific vehicles or products is for reference only. This information is not a personal recommendation for any particular vehicle, product or service - if you are unsure about the suitability of a product, you should consult with an expert.
Important information:
This blog was originally published on leaseplan.com website. The views expressed may no longer be current and any reference to specific vehicles or products is for reference only. This information is not a personal recommendation for any particular vehicle, product or service - if you are unsure about the suitability of a product, you should consult with an expert.
