Chancellor snubs EVs in budget, retains 5p fuel duty freeze

Chancellor Jeremy Hunt has snubbed calls from across the automotive industry to introduce incentives for electric vehicles in today’s spring budget.

During his hour-long statement, no benefits were brought in to either incentivise buying or reduce the cost of ownership as the UK gears up to go EV-only in 2035.

This lack of EV incentives has been blasted by Vauxhall, a key player in the UK automotive manufacturing sector. Managing director James Taylor said the budget “has not delivered the acceleration needed to stop the UK’s transition to electric vehicles from stalling”.

Calls for buying incentives have become louder since the government‘s introduction of the ZEV mandate, which legislates that car manufacturers must hit an EV sale target – 22% of their total sales this year.

Car makers argue that private buyers should get the same incentives as fleet buyers.

Taylor said: “Whilst there are strong incentives for company car drivers to make the switch to electric, including for those choosing luxury vehicles, the private buyer who wants a more attainable small or family car receives nothing.  

“If we are to meet the rightly ambitious targets laid out in the ZEV mandate, then there needs to be incentives for private car buyers to make the switch to electric, as there are in the majority of European nations.”

The likes of Volkswagen UK boss Alex Smith and the SMMT have also called for a cut in the VAT rate of public charging from 20% to the 5% of home charging.

Taylor said: “If you can charge your electric vehicle at home with off-street parking, then you will pay 5% VAT on your electricity. If you don’t have a driveway and rely on public chargers, then you will pay 20% VAT on your electricity.

“We support the Fair Charge campaign for a fairer taxation on charging.  

“We would call on the Chancellor to urgently set up purchase incentives to stimulate the electric vehicle market and review the unfair taxation on public charging so that the UK isn’t left behind in the race to more sustainable motoring.”

The spring budget was also expected to bring an answer on the potential extension to the VED exemption of EVs, which will end in 2025, but Hunt said nothing about this. 

Hunt did, however, confirm that fuel duty will be kept at 5p for another year. He said the duty cut, introduced when fuel prices hit record highs in 2022, would “save the average driver £50 over the next year and bring total savings since the 5p cut was introduced to £250”.

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