Government Incentives for Electric Cars and Vehicles

Are you considering buying an electric car or vehicle? Take a look at the available government incentives for electric cars such as grants and tax benefits that are available to reduce your upfront costs as an individual or as a business. Whether it helps in the cost of installation of an electric car charger, reducing the vehicle's list price or local incentives for parking benefits and permits, investigate the incentives that are available for eligible vehicles.

Government Incentives for Electric Cars UK

Up until June 2022, buyers of plug-in electric vehicles were able to get a government grant of up to £5,000 to put towards the cost of a new battery electric or plug-in hybrid car but this has since been withdrawn. This grant helped to encourage the purchase of electric vehicles which are beneficial for the environment and the local area.

Despite the withdrawal of this government grant, there are still several grants and incentives to incentivise the purchase and uptake of electric vehicles.

The electric car grants were originally in place as the cost of the large battery pack used to power the vehicles was extremely high and often out of reach for the general public. Although the price difference between electric vehicles and petrol and diesel cars has reduced, EVs have become more common on the roads leading to a reduction in government incentives and aid.

Electric Vehicle Tax Breaks

The UK government incentives for electric cars and vehicles offer several tax breaks to encourage the adoption of these low-emission vehicles for a positive environmental impact. These incentives aim to reduce the financial burden on individuals and businesses purchasing or leasing electric vehicles, consequently encouraging cleaner transport and contributing to the country's net zero carbon emission goals.

Here is a breakdown of the key electric vehicle tax breaks in the UK in 2024:

• Benefit-in-Kind (BiK) Tax

Benefit-in-Kind tax is a company car tax on employees who receive benefits from their employers such as a company car. Electric vehicles have a much lower BiK compared to petrol or diesel cars. For the tax year 2024/25, the BiK rate for pure electric vehicles is 2% of the car’s value, a rate that is significantly lower than that for conventional vehicles, which can be as high as 37%.

• Vehicle Excise Duty (VED)

VED, commonly known as vehicle road tax, is a tax that vehicles must pay to use the road in the UK. Since 2024, pure electric vehicles have benefited from an exemption to this tax allowing the car owners to pay no road tax on these vehicles.

• First-Year Allowance (FYA)

The first-year allowance is a form of tax relief that allows businesses to deduct the full cost of qualifying assets, like electric vehicles, from their pre-tax profits. This incentive is available until 31 March 2025.

• Congestion Charge and Clean Air Zones

Electric vehicles are exempt from congestion charges in clean air and low emission zones such as London’s Ultra Low Emission Zone (ULEZ) or Birmingham’s Clean Air Zone. This exemption makes driving an electric vehicle in these zones more cost-effective.

Government EV Charging Schemes

There have been a lot of name changes and allowance changes for the UK government's EV charging schemes. Below is an explanation of the current offerings for residential and commercial properties, who can apply for them and the benefits of the government EV charging schemes:

• OZEV Home Charging Grant

The EVHS (Electric Vehicle Homecharge Scheme) is a government plug-in grant for residential properties. As of 2024, this scheme has transitioned to the EV Chargepoint Grant which focuses on rental properties and leasehold properties, offering up to 75% off installation costs or charge point sockets, capped at £350. There isn't currently a grant available for those who own a house.

The scheme is administered by OZEV (The Office for Zero Emission Vehicles).

Local UK Government Incentives for Electric Cars

A large part of the nationwide plan to expand the charging network is local UK Government incentives for electric cars and vehicles. These local grants and financial incentives aim to help local communities transition to fully electric cars and vehicle driving.

A few local schemes are running currently that are available to give communities a boost such as street parking permits, free parking spaces, use of bus lanes and free use of charging stations. It’s a good idea to see what’s on offer from your local public authority.

Get in touch with Volta EV, a family-owned company with over 10 years of experience in the electrical wholesale supply chain, to find out more about the grant and tax incentives available. Whether you are a business, homeowner, or fleet driver, our expert team is happy to help you find the right EV charger along with the most suitable government incentive no matter the type of vehicle. Get help and guidance on the application process today.

Get in touch here!