UK government has made changes to the plug-in vehicle grant scheme

As public awareness of the damages caused by motor vehicle pollution increases, a growing number of the population are looking to switch to electric, or hybrid, vehicles. Even for those who are not particularly environmentally conscious, switching to an electric vehicle has become more attractive due to government plans of stopping fossil-fueled car sales by 2035. As such, a scheme released by the UK government meant that those who bought electric cars could also receive a grant of £3,500 to encourage more people to make the switch.

However, there were many complaints with the first grant scheme that it was not beneficial for those looking to buy an “affordable” model. In response to the complaints, the government have amended the scheme to target less expensive models, allowing the funding to be available for more buyers and further encouraging people to make the switch. From today (18 March 2021), the government will provide grants of up to £2,500 for electric vehicles priced under £35,000. This means that the funding per individual has been cut significantly from the original £3,500 grant, but the funding will be available to more people on lower-priced vehicles. Generous tax incentives, including favourable company car tax rates, which can save drivers over £2,000 a year, will also remain in place.

Unfortunately, grants will no longer be available for higher-priced vehicles. However, the governments justification for this is that these models are “typically bought by those drivers who can afford to switch without a subsidy from taxpayers.”

Many car manufacturers are also taking advantage of the opportunity; since 2019, the number of electric car models priced under £35,000 has increased by a whopping 50%. This means that more than half the electric models available on the market today will be eligible for the grant.

Finally, the government is also planning to invest more than £15 billion of new money in alternatives to cars, including:

  • £3 billion for buses
  • £2 billion for cycling
  • More than £4 billion for local transport in cities
  • £5 billion for enhancements to the rail network

The reduction in grant from £3,500 to £2,500 may come as a disappointment to some. On the contrary, those looking to buy an “affordable” model are most-likely delighted with the news. We guess that the only question left to ask is… will you be making the change?

If you have any questions about the content in this article, please contact your usual Partner or Manager, or call us on 01942 242 245, and we will be happy to help.




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