The Society of Motor Manufacturers and Traders (SMMT) has described the Spring Budget, delivered on 6 March 2024, as a missed opportunity to stimulate private demand for electric vehicles. In a statement published on 8 March 2024, the industry body said the Budget contained no fiscal measures aimed at private EV buyers, and set out the measures it had sought instead1.
The SMMT said private buyers accounted for fewer than one in five new EVs registered so far in 2024, with rising overall EV demand attributable to the fleet and business sectors and their fiscal incentives1. It stated that Britain is the only major European market with an end-of-sale date and a prescriptive market regulation, but no private EV incentives1. The Budget itself did not introduce any such incentive.
"This week's Spring Budget represents a missed opportunity to jumpstart the mass EV transition amid slowing demand for privately bought EVs."
The body's central proposal was a temporary halving of VAT on new EVs for three years, which it said would save the average EV buyer around £4,000 off the upfront purchase price and cost the Treasury less than the early adopters' Plug-in Car Grant. It estimated this measure alone would put more than a quarter of a million additional EVs on the road, all substitutional purchases for fossil fuel alternatives1. It also called for EVs to be excluded from the Vehicle Excise Duty supplement due to come in next year, and for VAT on public charging to be reduced so that drivers pay the same tax per kWh as they would charging at home, a difference it called the VAT "pavement penalty"1.
| SMMT proposal | Stated effect |
|---|---|
| Halve VAT on new EVs for three years | Around £4,000 off the average upfront purchase price; more than a quarter of a million additional EVs1 |
| Exclude EVs from the VED supplement due next year | Removes the supplement from electric vehicles1 |
| Cut VAT on public charging to home-charging rate | Equal tax per kWh for public and home charging1 |
The SMMT contrasted the treatment of EVs with support available for other net zero technologies, noting that incentives are available for heat pumps and solar panels while electric vehicles receive no such support1. It said the current higher cost of making and selling EVs, plus consumer discouragement over the shortage of public charging infrastructure, present major barriers to adoption1.
Why it matters for households
For a household weighing up an electric car, the Budget left the upfront cost of a privately bought EV unchanged, and no new purchase grant or VAT reduction has been reported. The SMMT's figures indicate that the growth in EV registrations is coming from fleet and business purchases rather than private buyers, so the fiscal support that exists sits with company and fleet arrangements rather than with households buying outright1. The grant landscape for private buyers has narrowed over time: the Electric Car Grant and the Closed Plug-in Car Grant and the Electric Vehicle Homecharge Scheme are both closed to new applicants, while the Electric Vehicle Chargepoint Grant for Renters and Flat Owners remains aimed at specific tenures. Charging costs also differ by location, which is the gap the SMMT's VAT proposal addresses; the smart charge point regulations govern how home charge points operate, and vehicle-to-grid and vehicle-to-home arrangements offer a route to using a car's battery in the home. The EV charging hub covers the wider picture.
What happens next
The SMMT said the Vehicle Excise Duty supplement is due to come in next year, which it wants EVs excluded from1. No government response to the SMMT's proposals has been reported.