The Autumn Budget Extends Tax Incentives for Electric Company Cars
The recent Autumn Budget has brought both good news and bad news for company car drivers. While tax incentives for electric company cars have been extended until at least April 2030, significant tax hikes are on the horizon for plug-in hybrids and double-cab pick-up trucks.
Company car tax has long incentivized low-CO2 vehicles, with the taxable value of a car for personal use being a percentage of the car’s list price, weighted according to its CO2 emissions and electric-only range for most plug-in hybrids.
Electric cars have been taxed at ultra-low rates since 2020, currently at 2%, providing a substantial tax saving compared to petrol or diesel vehicles. However, the Autumn Budget confirmed that these rates will gradually increase to 5% by April 2028, with incremental increases to 7% in 2028/29 and 9% in 2029/30.
On the other hand, plug-in hybrids will face significant tax rises, with a new single 18% rate replacing the current system for vehicles emitting 1-50g/km CO2 from April 2028, rising to 19% in 2029/30. PHEVs capable of traveling at least 130 miles on battery power will see their company car tax rates more than triple overnight.
The Autumn Budget also closes two long-running company car tax loopholes. Firstly, from 6 April 2025, double-cab pick-up trucks will be classed as passenger cars for company car tax purposes, based on CO2 emissions, instead of being taxed as light commercial vehicles.
Overall, while the extension of tax incentives for electric company cars is a positive development, the significant tax hikes for plug-in hybrids and pick-up trucks will require company car drivers to carefully consider their options in the coming years.
