How will this years Spring Budget impact EV consumers and businesses?

Spring Budget
© Aleksandr Faustov

Tanya Sinclair, Policy Director UK & Ireland at ChargePoint, discusses what the 2021 budget announcement means for consumers and businesses regarding EVs, and how to apply and gain access to the subsidies from a business and personal perspective

Covid has had a substantial impact on the sale of new cars. Over the first six months of 2020, UK-based car manufacturers produced just 56,000 units, the lowest output since 1954. However, the interest in and sale of EVs has been going from strength to strength.

The most recent figures from the SMMT show that in March 2021 more than double the number of EVs were sold versus the same period last year with just over 22,000 battery-electric vehicles (BEVs) and more than 17,000 plug-in hybrids (PHEVs) being sold over the month. This represents a jump of 112.5% in total EV sales compared with March 2020. For the first time in 2021, an electric car has made it to the top ten bestsellers with Tesla’s Model 3 coming in fourth last month, selling 6,585 models in the UK.

Electric vehicle grants

Whilst this growth is something that must be much appreciated in Whitehall for the growing impact it will have on our CO2 targets, it will also lead to some head-scratching as to how to continue supporting this growth financially. With this level of growth, the government cannot continue to subsidise chargers and vehicles as it has done since the earliest days of this market. Indeed in the last few weeks, it has already cut the Plug-in Car Grant and announced a cut to the home charge grant.

The government has, in its most recent budget, given an example of how it can still support the EV market without the high sustained costs of grants, by introducing fiscal incentives. It had already consulted on a reform of Vehicle Excise Duty which would benefit EVs but the super-deduction announced in the Budget (although not specifically for EV charging) is another measure that will support businesses seeking to make these investments.

Business taxes

The super-deduction, which came into force on 6th April, is an innovative tax instrument never before utilised in the UK. It means that eligible businesses can get a 130% write-down on taxable profits against qualifying plant and machinery equipment before 31 March 2023. This includes new electric vehicle (EV) charging equipment, helping to ensure that spending is not just aiding economic recovery, but a green economic recovery.  

This means that for every pound spent, businesses’ taxes on this equipment are cut by up to 25p in the pound. And because purchases of new EV charging equipment qualifies for this tax benefit, if an eligible business spent £100k on charging solutions, it would then be able to deduct 130% of that cost (£130k) when calculating its taxable profits. These businesses can minimise their tax exposure during this period of COVID recovery while they are investing in the transition to EVs.  

Although this policy wasn’t designed specifically with EV charging infrastructure in mind, the government has named it as one of the key areas where businesses will be able to benefit. However, the tax benefit offered by the super-deduction isn’t without a catch – it’s a write-down against corporation tax so any business able to claim it will have to be profit-making.  

This tax benefit comes at the perfect time for businesses with any transportation elements, whether this is a single company car or a whole fleet of delivery vehicles. In November 2020, only a few months before the Budget, the government announced it would end the sale of petrol and diesel cars and vans by 2030. This announcement gave the car, the charging and the energy industry a clear target to meet in terms of providing enough vehicles, chargers and clean energy to support this unprecedented shift. 

In years past, some EVs would have waiting lists of over 12 months, but with the 2030 announcement the UK is now perceived to be a key EV market for car and van manufacturers, so they are making sure that they increase supply – introducing new models and producing and importing enough vehicles to meet the increasing demand. And charging companies, already starting to see this huge increase in EVs on the roads, are rapidly increasing the rate at which they install chargers to serve this population of vehicles. The government, having set the pace of change with the 2030 announcement, have also committed to introducing a suite of new regulations to ensure that all chargers are reliable, smart and easy to use.

For those businesses who have been thinking about buying EV charging equipment but have been waiting for the right time, now is that time. Not only because the EV market is picking up, but because it now makes more sense than ever before on the balance sheet. This becomes a more prescient point with the planned increase from 19% to 25% in corporation tax which comes into force after the super-deduction ends. 

The government still has some work to do in helping convince businesses and individuals that now is the right time to electrify. Many EV drivers still struggle to get their heads around the multiple closed networks in the UK, which leads to them having to sign up to and carry several apps and cards to feel confident to be able to charge at any station. My own company, ChargePoint, is committed to making our network open and easy to use to any driver, regardless of who’s account they prefer to pay with, which is achieved through bilateral roaming agreements between different charging networks.

By fully implementing roaming agreements, not knowing which card or app to use becomes a thing of the past – any card can access any charger. While progress is being made in the UK, it’s not quick or visible enough, so the government is considering taking powers to end the days of closed networks that need a specific card or app to access them. This is a vital step on the way to giving even the most cautious EV adopters more confidence to make the switch, in the knowledge that they will be able to charge their EV anywhere with a card or app of their choice. 


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