Driving Forward: Impact of the 2023 UK Budget on Car Owners and Drive Fuze
Driving Forward: Impact of the 2023 UK Budget on Car Owners and Drive Fuze
On November 22, 2023, UK Chancellor Jeremy Hunt delivered his autumn statement. Here’s a recap focused on how the latest government announcement affects car owners in the UK.
Fuel Duty changes
The spring budget saw a freeze in fuel duty, remaining unchanged at 52.95 pence per litre. The autumn statement reinforces the good news, as there is again no change to fuel duty. This means that drivers won’t experience huge price jumps at the pumps.
This stability is crucial in a time of economic uncertainty and rising living costs, allowing car owners some much needed breathing space.
Vehicle Excise Duty (VED)
April 2023 saw VED rising in line with inflation, and this trend is set to continue from 1 April 2024 for drivers.
The flat rate paid from year two, as well as the first-year rate, will increase. Zero-emission drivers can rejoice, however, as zero-emission vehicles will continue to be exempt.
This policy quite clearly favours EV drivers and aligns with the UK’s broader environmental goals of having 100% of new cars sold in the UK be electric by 2035. VED for HGVs will remain at 2023-24 rates for 2024-25, indicating that the focus is not on overly burdening the logistics and transportation sectors.
Infrastructure investment
Chancellor Hunt highlighted the inefficiencies of the UK's current planning systems for electric car charging points. He went on to state that his government aims to significantly expedite the growth of electric vehicle charging infrastructure by eliminating the current unnecessary planning rules.
The also an introduction of an 'Action Plan', which strives to cut the time required to construct new grid infrastructure by half. These measures are expected to lower electricity costs, indirectly making owning electric vehicles more affordable for both potential buyers and current owners.
This benefit will of course extend to Drive Fuze customers who choose an electric car for their flexible car subscription. There will certainly be more value to be had from car subscriptions due to the enhanced charging infrastructure and continued incentives for zero-emission vehicles.
Electric Vehicle (EV) incentives
There was an expectation that we would see incentives for EV owners in the autumn statement. Perhaps grants towards the purchase of new electric vehicles, additional charging points, and tax credits.
No grants were referenced in the autumn statement, however, but the Chancellor has confirmed investments of £2 billion to boost zero-emission projects, which will become clearer in 2024.
Support for zero emissions
The autumn statement committed to supporting zero-emission investments in the automotive sector to the tune of £2 billion.
Specifically, this means a significant investment towards building electric cars in the UK. The Chancellor wishes to encourage new investment in zero-emission vehicle manufacturing, and commented that the money would “ensure that the UK remains competitive”. The plan for the investment is to be spread over five years from 2025.
An advocate for this support came from business secretary Kemi Badenoch, saying that it “builds on recent investment wins”, referring to the £4 billion invested in a UK gigafactory producing batteries for electric vehicles.
The £600 billion investment from BMW to produce the Mini Electric in Oxford for another generation is another boost to the electric vehicle market.
There was also an announcement to extend a £150 million programme researching self-driving vehicles until a review in 2030.
VAT on EV charging
Currently, VAT is charged on electric vehicle charging.
Before the autumn statement announcement, there were discussions about the potential to decrease or even abolish this tax. The concept serves to motivate more drivers to transition to electric vehicles. Nevertheless, such a change was not part of the announcement.
Despite this, EVs are still a compelling choice, especially for Drive Fuze subscribers. The existing advantages of EVs, including environmental benefits and advanced technology, are a popular option in Drive Fuze's subscription model, especially considering the often high upfront costs of buying an EV.
The long-term costs of driving EVs, even with charging, are often lower than traditional vehicles, thanks to reduced maintenance and operational expenses.
Overall economic outlook
The 2023 autumn statement has a significant emphasis on both economic stability and green initiatives.
This announcement poses an opportunity for drivers to align choosing a flexible car subscription with the evolving market trends. The government's steadfast approach to fuel duty and Vehicle Excise Duty, coupled with its substantial investments in zero-emission vehicles and electric vehicle infrastructure, is a move in the right direction.
Please get in touch for support on any of the topics raised and how the changes might affect you as a driver in the UK.
