Any hope for government aid and fiscal stimulus package for the electric vehicle (EV) retail market was dashed by the Chancellor’s latest announcement in her Spring Statement.
As expected, there were no new tax increases, other than those previously announced and due to take effect in the coming weeks but those dealer groups that were optimistic about receiving some form of help for the retail market for electric vehicles will be disappointed.
Sue Robinson, chief executive of the National Franchised Dealers Association (NFDA), which represents franchised car and commercial vehicle dealers across the UK, commenting on the absence of any measures here, said “the Spring Statement did not provide an update on the electrification of the UK car parc. This transition provides a huge economic opportunity for the UK and the Government needs to be incentivising consumers to purchase a new vehicle, which will drive growth in the UK economy.”
Any hope for government aid and fiscal stimulus package for the electric vehicle (EV) retail market was dashed by the Chancellor’s latest announcement in her Spring Statement.
As expected, there were no new tax increases, other than those previously announced and due to take effect in the coming weeks but those dealer groups that were optimistic about receiving some form of help for the retail market for electric vehicles will be disappointed.
Sue Robinson, chief executive of the National Franchised Dealers Association (NFDA), which represents franchised car and commercial vehicle dealers across the UK, commenting on the absence of any measures here, said “the Spring Statement did not provide an update on the electrification of the UK car parc. This transition provides a huge economic opportunity for the UK and the Government needs to be incentivising consumers to purchase a new vehicle, which will drive growth in the UK economy.”
“The absence of support is compounded by the expected removal of the VED exemption for electric cars from 1 April, which could further hinder the required growth of electric vehicle sales to meet the ZEV mandate targets,” said tax expert Anthony McFarlin from advisor MHA.
Iain Reid, head of editorial at online marketplace Carwow noted that with public finances under pressure, the Government was in no position to offer any big-ticket incentives for motorists – especially when it comes to buying electric vehicles.
“We know from our own data that consumer interest in EVs is growing, as evidenced by the 87% increase in EV enquiries on Carwow this February, compared to the same month in 2024,” he said. “We were hopeful that today’s budget would provide motorists with some incentive to buy and help convert this increased interest into actual sales.
The absence of support is compounded by the expected removal of the VED exemption for electric cars from 1 April, which could further hinder the required growth of electric vehicle sales to meet the ZEV mandate targets.
“There is a simple move that could have helped get more drivers into EVs: scrap the looming ‘expensive car supplement’ for electric models. From 1 April, EVs with a list price over £40,000 will be hit with an extra £410 a year in road tax. This undermines the in-life savings that make EVs attractive and risks pushing drivers towards cheaper petrol models instead – making it even harder for the Government to achieve its own net-zero ambitions.”
“Unfortunately, dealers have no influence over that £40,000 threshold, said Reid. “This ‘luxury car tax’ is based on the vehicle price when new, so no amount of dealer discounts or offers will impact whether a consumer has to pay it or not. It’s a huge oversight that this unnecessary tax was not addressed by Mrs Reeves in her statement today; scrapping it would doubtless attract more people into EVs – supporting both our national adoption goals and the UK’s automotive sector.”
The chancellor also announced that a key fiscal rule will be missed by £4bn due to rising borrowing costs. While there were also announcements on welfare reforms and a number of ‘efficiency plans’,she said a crackdown on fraud and tax evasion would be key to reducing the deficit.
Reeves said her plans would “increase the number of tax fraudsters charged each year by 20%”. Such changes will take the total revenue raised from reducing tax evasion to, an OBR verified, amount of £7.5bn. Focus on these areas is set to intensify as HMRC inspectors seek out revenue opportunities and businesses look to protect themselves.
“Dealers should be looking to ensure their internal system, controls and governance are in good shape,” said McFarlin at MHA which has helped a number of dealers assess and test their senior accounting officer and corporate criminal offence procedures.
The NFDA said it remains of the view that raising employer NICs by 1.2 per cent to 15 per cent announced in the last Budget will significantly increase the cost of running a franchised dealership, particularly at a time when businesses are already facing pressure from rising energy costs and adapting to the shift towards electric vehicles.
“Overall, there were missed opportunities in today’s announcement to use the automotive sector to stimulate growth in the UK,” said NFDA chief Robinson.
The chancellor announced that the 2025 growth estimate for the UK has been halved by the government’s official forecaster, the Office for Budget Responsibility (OBR) although noted that it had upgraded its longer term growth estimates from 2026.
The OBR in its own report confirmed that the economic and fiscal outlook has become more challenging since the Autumn Budget with domestic output stagnating in the second half of 2024 and business and consumer confidence dipping.
“Against this more challenging and uncertain backdrop, we now expect real GDP growth of 1.0 per cent this year, half the rate in our October forecast, before it recovers to average around 1¾ per cent over the rest of the decade.”
“Significant uncertainty surrounds domestic and global economic developments,” it added. “If the projected recovery in UK productivity growth fails to materialise, and it continues to track its recent trend, then output would be 3.2 per cent lower and the current budget would be 1.4 per cent of GDP in deficit by the end of the decade. A 0.6 percentage point increase in Bank Rate and gilt yield expectations across the forecast would eliminate current balance headroom.”
“And if global trade disputes escalate,” it noted, “to include 20 percentage point rises in tariffs between the US and the rest of the world this could reduce UK GDP by a peak of 1 per cent and reduce the current surplus in the target year to almost zero.”
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