Budget 2025: Transport

Gravita’s view

Anything that suppresses already sky-high fuel prices for a little longer has got to be a good thing!

Gravita’s view

This seems perfectly reasonable, given what the scheme is designed to do!  If someone choses to upgrade, then they should cover the full cost of this.

Gravita’s view

The Government is quite rightly looking to fill the hole in lost revenues from the use of EVs and PHEVs by motorists – there are after all an estimated 2.8 million on UK roads already. We completely agree that the most sensible strategy is to increase the annual road tax paid by those motorists as other options, like using a black box in each persons car, or somehow taxing the electricity used to power the vehicles, are obviously unworkable for many reasons – with the former having already been specifically ruled out by the Government as a breach of privacy.

However, this system has all the hallmarks of a good idea that is practical in its application. In an ideal world, this would work. But we do not live in one of those.  Drivers drive their cars overseas. They buy and sell cars during the same year. Technology changes and improves which will dramatically change powertrains including how they charge. All of this will add layers of complexity.

Now, let us return to the estimated 2.8 million such cars already on the road. That is a lot of people who need to conform.

It seems to us that they are so close to a simple solution, but they are doing their best to make it difficult. Why not simply add a bit to the annual road tax for an EV and a bit less for those that drive a PHEV. Yes, there will be some winners and losers – there are already with cars that run on petrol and diesel. But the cost of administration will be minimal, there would be little room to avoid it as there is today, and therefore the compliance levels will be very high and the cost of enforcement very low.

We hope that following consultation, they opt for a simple system, which is perhaps not ‘fair’ per person, but is ‘fairer’ across the board.

Gravita’s view

The policy will bring ECOS into the Benefit-in-Kind (BiK) system meaning these schemes will eventually be taxed like regular company cars.

ECOS have been popular because they avoided BiK charges as the car was technically “owned” by the employee. Once the new rules kick in, expect higher tax bills, especially for cars with high list prices or emissions.

The silver lining is that the change, originally set to come in from April 2026, has been pushed back to April 2030, with transitional arrangements until 2031. So, there is some time for both employees and employers to prepare.

Gravita’s view

The government has decided to keep the generous tax break for electric vehicles and charging equipment going for another year. More breathing room for now.

The delay means businesses can still claim 100% first-year allowances on qualifying zero emission cars and EV charge points. So, instead of spreading the tax relief over several years, which will be the case once the relief ends, you get the full deduction upfront in the year you buy them, a big boost for cash flow.

The extension runs until 31st March 2027 for corporation tax and 5th April 2027 for income tax.

If you are thinking about investing in electric vehicles or charging infrastructure, you have a little more time to take advantage of the tax benefit right away.  However, as a note of caution, please keep in mind that from April 2028, EV drivers will pay 3p per mile (and 1.5p for plug-in hybrids) as a road usage tax, on top of Vehicle Excise Duty (VED).

Gravita’s view

During this easement period, PHEV company cars will have lower BiK charges than they would under the updated emissions data, meaning employees won’t see a sudden hike in their monthly PAYE deductions until after 5 April 2028.