Government Announces Shake Up of Plug-in Car Grants
The Government’s Office for Low Emission Vehicles (OLEV) has announced significant changes to the grants available for plug-in vehicles.
The changes were due to come into effect from 9th November but were brought forward to 21st October due to what has been termed, ‘exceptional demand’, as individuals and organisations sought to qualify for the old, more generous grants.
Through the modifications to the scheme, OLEV has extended the availability of purchase incentives to the next 35,000 cars, but reduced the number of vehicles that are eligible and the maximum value of the grants.
The previous grants provided different levels of incentive depending on the vehicle’s CO2 emissions and the distance that they are able travel on battery power alone. The details are shown in the table below:
The revised scheme dispenses with categories 2 and 3 altogether and reduces the maximum grant for Category 1 vehicles from £4,500 to £3,500.
This means that around 20 plug-in vehicles currently available in the UK will no longer be eligible for any Government support, while the 19 that remain eligible will effectively be £1,000 more expensive to buy. The changes do not impact on the grants available for vans or motorcycles and a full list of the cars that will remain eligible can be found on the OLEV website.
The Government has stated that the changes reflect the success that the grant scheme has had in assisting the purchase of around 160,000 cars over the last seven years, as well as the reduction in the price of some plug-in vehicles in recent months. The Government also sites an increased focus on promoting zero-emission vehicles for the removal of eligibility for higher emitting plug-in hybrids.
Is it still worth considering a plug-in car?
While this news may be seen as a disincentive to choosing a plug-in, there are still sound reasons for choosing one, depending on your transport needs.
Running costs for PHEVs, compared to traditional petrol and diesel vehicles, can be significantly lower if journey types, driving style and access to charging allow for the maximum use of electric-only miles. With commuting distances for most being under ten miles, many PHEVs are capable of achieving the round trip even without access to a charging station at the workplace. For those covering longer distances, it’s unlikely that a plug-in would match the running costs of an efficient diesel car.
First year VED rates are also considerably lower for many plug-ins, with charges for vehicles producing less than 50g/km CO2 starting at just £10. By comparison, a petrol car emitting 150g/km attracts a first year rate of £205.
The position with company car tax is somewhat more complicated, with rates for even zero emission vehicles increasing in the 2019/20 tax year to a minimum of 16%, before falling back in the 2020/21 tax year to as low as 2%.
What if I have already ordered a plug-in car?
As long as the dealer has correctly submitted the claim for the vehicle to OLEV, then it will qualify for a grant at the rates that were in effect when the car was ordered. It’s important to note that the car must be delivered within 9 months of when the claim is submitted.
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