Missed Opportunities in the 2024 Autumn Budget

Why Supporting the Used EV Market Is Critical For UK Business and the Environment

By David Bushnell, Director of Consultancy and Strategy at Fleet Operations.

The Case for Supporting the Used EV Market

As the 2024 Autumn Budget was unveiled, hopes were high across the UK’s automotive industry for policies that would democratise access to electric vehicles (EVs). Yet, the government’s strategy fell short. While it focused on high-profile projects and charging infrastructure, support for the second-hand EV market—a vital component of the UK’s journey to net zero—remains glaringly absent. Without a plan from government to make used EVs more affordable, the UK’s sustainable transport transition will continue to stall.

New Electric Vehicles Are Not Accessible to “Working People”

During an ongoing cost-of-living crisis, new EVs, with their premium price tags, remain inaccessible to many — especially many of those who qualify under Starmer’s recent controversial “definition” of a “working person”. This situation is compounded by the increase in employers’ National Insurance contributions, limiting salary growth and further curbing purchasing power.

Given that the average annual income in Britain is approximately £34,000-£35,000, most drivers simply cannot consider spending upwards of £40,000 on a new electric car. And with policies like the “expensive car supplement,” now encompassing standard EVs due to their high production costs, the reality of purchasing an electric car is now even more out of reach to the average household. This annual Vehicle Excise Duty (VED) surcharge, applied to EVs with a list price exceeding £40,000 for five years, adds significant ownership costs. Many of these “expensive” vehicles are not luxury models but mainstream options, priced steeply due to the technology that powers them.

Used EVs: The Missing Link in the Transition

The government’s disregard for used EVs underscores a major policy oversight. Transitioning to electric must be an option for all, not just the affluent. Yet, there are no grants, tax reliefs, or incentives for second-hand EVs—vehicles that could make zero-emission driving more accessible to more people much faster.
This oversight ignores a simple reality: most cars in the UK are purchased second-hand. Supporting this market could accelerate the removal of petrol and diesel cars from the roads, significantly cutting emissions.

Consider the scenario faced by a typical owner of a 2017 EV who, come April 2025, will pay £190 annually in VED—the same as a driver of a 10-year-old diesel vehicle that emits vastly higher levels of CO₂ and particulates. Not only does this policy appear to punish early adopters who invested in EVs to support the UK’s net-zero goals, but it also acts as a deterrent for those considering an EV purchase.

Battery Concerns and Charging Anxiety: Addressed for New Buyers Only

While the budget provided funds to expand charging infrastructure, this isn’t enough to give all EV drivers the confidence they are looking for. Used EV buyers still face questions around battery health, range, and resale value, and these concerns remain unaddressed by any governmental support structure.

Ideas such as subsidies for affordable battery testing, tax breaks for refurbishing second-hand EV batteries, or incentives for dealerships that want to resell these vehicles with verified battery life guarantees could make a big difference when it comes to weighing up the risks of purchasing a used electric vehicle.

Cost to Charge: The Hidden Expense Killing EV Appeal

Charging costs remain a major deterrent for many drivers in the UK, particularly for used EV owners reliant on public charging. As energy prices remain high, the cost to charge a used EV is almost as expensive as refuelling with petrol. If the government wants to show that its serious about reaching its sustainability and emissions goals, it’s time to make the economics of owning a used EV competitive.

Lower charging costs or tax relief for used EV owners could help bring EVs within the reach of millions more people and keep the government on course for reducing emissions by 68% by 2030. Without this, second-hand EVs will remain an untapped potential—a niche market only available to those willing to take a financial risk.

Policy Gaps: Who’s Really Making These Decisions?

The oversight raises questions about who the government is really listening to. The emphasis on new EVs aligns more with manufacturers’ interests, but does this align with the average Brit’s budget? By neglecting to support the second-hand market, the government shows a disconnect from the financial realities faced by most UK households.
Meaningful incentives—like tax breaks for used EV purchases, grants for certified battery reconditioning, or incentives to make charging affordable and accessible at home—could transform the market and promote equitable access to zero-emission vehicles.

VED Changes: A Big Blow to UK Businesses and Tradespeople

The 2024 Autumn Budget’s decision to impose Vehicle Excise Duty (VED) on electric vans, and tax increases on double-cab pickups, is another misstep that risks derailing the green transition for small businesses, tradespeople, and self-employed drivers across the UK. Once exempt from VED as an incentive meant to encourage business owners to switch from polluting diesel vans to zero-emission alternatives, electric vans now face recurring costs. This sends a clear message to small businesses: going green
will now come at a price.

Electric vans have become increasingly popular among small businesses aiming to reduce fuel costs, cut emissions, and support the UK’s net-zero goals. Yet, with the VED now being applied to these vehicles, business owners are left to shoulder new, recurring costs. The move undermines the economic argument for transitioning to electric, especially at a time when small businesses are struggling with high energy prices and ongoing economic uncertainty.

For many, the added VED could tip the scales, making diesel vans—despite their emissions—look like a more affordable choice. This not only harms the environment, but also undercuts the appeal of electric vans at precisely the moment when the UK should be leading the way on clean business transport.

The government’s decision to increase taxes on double-cab pickups will also hit tradespeople hard. Double-cabs have been a lifeline for many self-employed drivers and small businesses, offering both passenger space and cargo capacity. For many in construction, farming, and other manual trades, double-cabs are essential vehicles—not luxury items. But with this tax increase, many double-cab drivers will see their annual operating costs rise sharply.

While these vehicles aren’t traditionally known for fuel efficiency, they play a critical role in supporting tradespeople who rely on them for transporting materials, tools, and staff to job sites. By increasing the tax burden on double-cabs, the government risks pushing tradespeople back towards cheaper, older diesel alternatives, as the upfront and ongoing costs of electric or low-emission alternatives remain prohibitive for many.

Counterproductive impact on the UK’s Net-Zero Strategy and Economy

In a market increasingly valuing sustainability, the UK risks falling behind in supporting its businesses in the shift to net-zero. Targeted policy interventions and regulatory alignment are essential for empowering businesses to be part of the green transition while maintaining economic resilience.

The VED and double-cab tax changes could have unintended consequences for both the environment and the economy. By imposing higher taxes on essential work vehicles used by small business owners, tradespeople, and self-employed workers, the government risks discouraging the adoption of cleaner, electric alternatives. This undermines the UK’s carbon reduction targets, especially considering that light commercial vehicles contribute significantly to urban air pollution. Penalising those who choose electric vehicles—or pushing them towards older, less efficient models—stalls progress towards cleaner, healthier cities.

These measures also pose economic challenges, particularly for low-margin trades and small businesses already dealing with tight budgets. Increased costs for electric vans and double-cab pickups could translate into higher service prices as businesses seek to offset their tax burdens. Consumers will ultimately feel this impact, and the competitiveness of small businesses—already grappling with inflation and rising interest rates—could suffer. In an economy where every pound matters, these tax hikes on work vehicles seem out of step with the realities faced by UK businesses.

The Need for Targeted Support, Not Blanket Taxation

The 2024 Autumn Budget’s lack of targeted support reflects a disconnect between policy and the daily challenges faced by small business owners and tradespeople. Without tailored measures or exemptions, the government risks alienating a crucial sector in the electric transition, missing a significant opportunity to promote a greener economy from the grassroots level.

To truly support small businesses in their transition to cleaner transport, a rethink is essential. Instead of broad VED charges, targeted incentives should be introduced for electric commercial vehicles and vital work vehicles like double-cabs. This approach could balance the need for tax revenue with the goal of aiding the UK’s green transition.

100% Capital Allowances for EVs Still Left in Limbo: A Missed Opportunity for Lessors and Fleets

One notable gap in the 2024 Autumn Budget is the continued deferral of a decision on 100% capital allowances for electric vehicles (EVs) leased by businesses. Despite the urgent need to encourage sustainable fleet transitions, the issue remains postponed to a “future fiscal event,” leaving lessors and fleet managers in a state of uncertainty. This delay is a setback for the leasing industry, which plays a vital role in offering affordable access to EVs for businesses and individuals.
Currently, businesses can write off the entire cost of qualifying EV purchases against their taxable income in the first year, incentivising sustainable investments. However, this tax benefit does not apply to leased vehicles, which are a popular choice for businesses looking to avoid the high upfront costs of purchasing. This policy gap effectively penalises companies reliant on leasing, limiting access to EVs and discouraging the growth of electric fleets.

Impact on Leasing Companies and Greener Fleet Adoption Rates

Leasing companies are essential to facilitating the UK’s EV transition, offering businesses a way to adopt electric vehicles without the significant initial outlay. The absence of 100% capital allowances for leased EVs adds uncertainty, making lessors hesitant to invest in electric stock. This could slow down the adoption of EVs in the business sector.

The current policy also disadvantages leasing companies compared to those offering outright sales, pushing some businesses towards traditional purchases instead of leasing—a route that could provide more flexibility and affordability. Without this tax support, businesses that might otherwise lease a fleet of EVs are likely to continue using existing fossil-fuel vehicles to avoid the higher costs.

Delaying 100% Capital Allowances Undermines Net-Zero Goals

Postponing this decision to an unspecified “future fiscal event” sends mixed signals to businesses looking to transition to net-zero. For companies and lessors that have committed to sustainability, the lack of clear tax incentives makes the shift more financially challenging. It also misses a key opportunity to impact carbon emissions in the commercial sector, where leasing could play a crucial role in replacing older, higher-emission vehicles with cleaner, electric alternatives.

This delay could also contribute to stagnation in the used EV market. If leasing companies are hesitant to invest in electric vehicles due to unclear financial benefits, fewer EVs will enter the second-hand market. This will keep prices high and limit options for budget-conscious small businesses and individuals. By failing to extend 100% capital allowances to leased EVs, the government is making it harder for both businesses and consumers to commit to electricity.

The Need for Immediate Action on Capital Allowances

To accelerate the green transition, the government should extend 100% capital allowances to leased EVs, making this tax benefit accessible to a wider range of businesses and fleet operators. This move would lower financial barriers, incentivise lessors to increase their electric offerings, and create positive ripple effects across the industry.

By neglecting this key support mechanism in the 2024 Autumn Budget, the government has missed a valuable opportunity to boost the leasing sector’s role in the EV transition. Without swift corrective action, businesses that rely on leasing will continue to face financial disadvantages, slowing the UK’s progress towards a net-zero transport sector.

Government’s Safety Concerns: A Strange Excuse in the Era of Modern Vehicle Technology

One reason cited for delaying the 4.25-tonne derogation for electric vans is “safety concerns” – an argument that seems increasingly disconnected from the reality of modern vehicle technology. Today’s electric vans feature advanced safety systems such as electronic stability control, lane-keeping assistance, automatic braking, and even AI-enhanced sensors. Citing safety worries as a reason for delaying the derogation feels out of step with these advancements.

It is perplexing that older, less equipped diesel vans can legally operate at higher weights, while modern, technologically advanced electric vans face restrictions. Drivers who passed their test before 1997 can operate vehicles up to 7.5 tonnes, often lacking today’s safety features. This inconsistency raises questions about the validity of the aforementioned safety concerns when applied to electric vans designed for zero-emission transport.

Shining the Light on a Bigger Safety Oversight

The government’s stance prompts the question: is “safety” a genuine concern or a convenient excuse for regulatory inertia? The claim doesn’t align with the safety standards of today’s electric vans, which often exceed those of their older diesel counterparts. Electric vehicles also show lower rates of mechanical failure, thanks to simpler drivetrains.

Delaying the derogation for electric vans on the grounds of safety overlooks the urgent need to reduce an even bigger public safety risk: air pollution. According to the World Health Organization (WHO), air pollution is the biggest environmental threat to human health. Diesel vans contribute significantly to poor air quality, impacting public health. By accelerating the UK’s transition to Electric vehicles (EVs) tailpipe emissions, such as nitrogen oxides (NOx) and fine particulate matter (PM2.5), that are produced by combustion engine cars will be significantly reduced, making for a safer, healthier environment for all.

An Urgent Need for Regulatory Alignment with Technology

As electric vehicle technology advances, the government’s safety concerns will only become more untenable. E-LCVs are not only equipped with state-of-the-art safety features but are also subject to the same rigorous testing and certification as any other road vehicle. Delaying the derogation on the basis of unfounded safety concerns, risks stifling innovation and adoption in the E-LCV market, while also leaving businesses who want to embrace green transport in a bind.

The continued inaction sends a troubling message: despite the government’s stated commitment to a sustainable future, regulatory progress is falling behind technological and market advancements. If the government is serious about achieving its green targets, it must act swiftly to change this.

Five Key Actions To Help The UK Stay On Track To Net Zero

The 2024 Autumn Budget presents a range of missed opportunities that risk impeding the UK’s journey to net-zero and harming economic productivity. If the current government wants to be remembered for accelerating a cleaner future, rather than for leaving the UK’s green dreams in the dust, several considerations are essential:

• • Rethink Tax Measures: The government must reconsider the imposition of VED on electric vans and increased taxes on double-cab pickups. These measures could discourage small businesses from adopting cleaner vehicles and slow down emissions reduction.
  • Introduce Targeted Incentives: Replace blanket tax charges with targeted support for essential work vehicles and electric commercial models. This would balance revenue generation with encouraging cleaner transport.
  • Expand Capital Allowances: Extend 100% capital allowances to leased EVs to remove financial barriers, boost fleet electrification, and accelerate EV adoption across business sectors.
  • Align Policies with Technology: Modernise regulatory stances to reflect current advancements in electric vehicle safety features. Address inconsistencies that hinder the green transition, like outdated safety concerns for electric vans.
  • Encourage a Thriving Used EV Market: Implement measures such as grants for battery reconditioning and subsidies to support second-hand EV purchases, making sustainable transport more accessible and affordable.

Without immediate action, the government risks missing a pivotal chance to drive an inclusive, sustainable electric shift—one that benefits drivers, UK business, and the health of our nation.