Budget 2024: Chancellor announces fuel duty freeze will continue
In the Labour Government's first budget, Chancellor Rachel Reeves has announced two new incentives to encourage more Brits to make the switch to an electric car.
Whilst many drivers will remember the October Budget for the sharp rise in fuel duty, impacting petrol and diesel prices, and a variety of tax increases, the Government has also introduced a new measure to keep the cost of running an electric car lower than other types.
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Announcing the budget in the Commons, Chancellor Rachel Reeves highlighted that the Government will extend the current company car tax rate on EVs until 2028 and make electric vehicle owners pay a different rate of tax than petrol and diesel car owners.
She explained: "I will maintain the incentives for electric vehicles in company car tax from 2028 and increase the differential between fully electric and other vehicles in the first year rates of Vehicle Excise Duty from April 2025.
"These measures will raise around ￡400 million by the end of the forecast period."
READ MORE: Rachel Reeves’s Budget plans spook financial markets as borrowing costs soar
In the budget, Chancellor Rachel Reeves announced a number of measures for EV owners (Image: Getty)
The Government has gradually axed a number of EV incentives as sales increase (Image: Getty)
Previously, the Government has imposed a number of incentives in a bid to encourage motorists to make the switch from petrol or diesel cars to fully-electric alternatives.
These have included a grant of up to ￡5,000 on any new electric model, which was subsequently limited to vehicles under ￡40,000 before being fully axed in June 2022.
However, with more electric cars on the road, the few remaining incentives are being phased out, including free road tax and a grant of up to ￡350 on a home charging point.
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A number of motoring authorities are calling for a cut in VAT for public charging (Image: Getty)
However, during the October Budget, the Chancellor confirmed that the current Benefit-in-Kind (BiK) rate, the tax company car drivers pay, will remain at two percent.
The rate was due to expire at the end of the 2024/25 tax year, expected to rise by a further percent by 2026.
Whilst Reeves has yet to confirm how much electric car owners will need to pay when their exemption ends in April 2025, she added that the amount would be different to petrol, diesel and hybrid drivers.
DON'T MISS
Powered by
DVLA issues urgent warning as UK drivers face extra ￡600 tax
Comments
Labour could put millions 'at risk' in Autumn Budget as experts push back at car tax rises
Comments
Older drivers born in these years face ￡1,100 pay-per-mile car tax charges from Wednesday
Comments
ANPR cameras to track pay per mile and charge drivers ￡1,570
Comments
War on motorists feared as Rachel Reeves urged to launch ￡10bn tax raid on drivers
Comments
Rachel Reeves announces fuel duty freeze in Budget after backlash from drivers
Comments
Male drivers face ￡160 pay-per-mile charges but women will pay ￡20 less
Comments
Labour voters reject pay-per-mile and fuel duty in Budget as drivers 'screwed'
Comments
Sales of popular car type plummet on new market - but expert offers drivers hope
Comments
Petrol and diesel owners can stop ￡175 fuel price hikes with three simple changes
Comments
Older driver fears being 'trapped' at home by Labour's rising fuel costs
Comments
The new petrol supercar that rivals EVs on emissions
Comments
Rachel Reeves could make monumentally bad electric vehicle decision within days
Comments
Car owners could save ￡1,200 on their energy bills with this new technology
Comments
Former Top Gear host slams Rachel Reeves for 'missed opportunity' in Budget
Comments
Electric car owners risk legal troubles for common yet risky practice
Comments
Huge VED EV car tax change announced in Labour Budget in blow for petrol or diesel drivers
Comments
Every motoring change announced for drivers in Labour Budget today
Comments
Every Labour Budget change planned for drivers from fuel duty to pay per mile
Comments
Drivers handed ￡1,050 as pay-per-mile plans shelved in bombshell Labour budget
Comments
DVLA issues urgent warning as UK drivers face extra ￡600 tax
Comments
Labour could put millions 'at risk' in Autumn Budget as experts push back at car tax rises
Comments
Older drivers born in these years face ￡1,100 pay-per-mile car tax charges from Wednesday
Comments
ANPR cameras to track pay per mile and charge drivers ￡1,570
Comments
War on motorists feared as Rachel Reeves urged to launch ￡10bn tax raid on drivers
Comments
Rachel Reeves announces fuel duty freeze in Budget after backlash from drivers
Comments
Male drivers face ￡160 pay-per-mile charges but women will pay ￡20 less
Comments
Labour voters reject pay-per-mile and fuel duty in Budget as drivers 'screwed'
Comments
Sales of popular car type plummet on new market - but expert offers drivers hope
Comments
Petrol and diesel owners can stop ￡175 fuel price hikes with three simple changes
Comments
Older driver fears being 'trapped' at home by Labour's rising fuel costs
Comments
The new petrol supercar that rivals EVs on emissions
Comments
Rachel Reeves could make monumentally bad electric vehicle decision within days
Comments
Car owners could save ￡1,200 on their energy bills with this new technology
Comments
Former Top Gear host slams Rachel Reeves for 'missed opportunity' in Budget
Comments
Electric car owners risk legal troubles for common yet risky practice
Comments
Huge VED EV car tax change announced in Labour Budget in blow for petrol or diesel drivers
Comments
Every motoring change announced for drivers in Labour Budget today
Comments
Every Labour Budget change planned for drivers from fuel duty to pay per mile
Comments
Drivers handed ￡1,050 as pay-per-mile plans shelved in bombshell Labour budget
Comments
DVLA issues urgent warning as UK drivers face extra ￡600 tax
Comments
Labour could put millions 'at risk' in Autumn Budget as experts push back at car tax rises
Comments
Older drivers born in these years face ￡1,100 pay-per-mile car tax charges from Wednesday
Comments
ANPR cameras to track pay per mile and charge drivers ￡1,570
Comments
War on motorists feared as Rachel Reeves urged to launch ￡10bn tax raid on drivers
Comments
Rachel Reeves announces fuel duty freeze in Budget after backlash from drivers
Comments
Male drivers face ￡160 pay-per-mile charges but women will pay ￡20 less
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Whilst many motoring experts have welcomed the Chancellor's decision, many are calling for further measures to be instated to boost EV sales.
The Society of Motor Manufacturers and Traders (SMMT) has called on the Government to make EVs worth more than ￡40,000 exempt from luxury car tax, meaning that owners will not need to pay an additional ￡410 fee for the first five years the vehicle is registered.
A number of other motoring campaign groups, including FairCharge, have also called for a reduction in VAT on public charging in a push to lower running costs for the zero-emission vehicles.