Incentives and Legislation
The incentives and legislations section is updated for 2025, published on 18th April 2025, representing the situation as of that date. Major changes of incentives and polices are updated on a rolling basis from that date onwards.
Incentives and legislation that aim to increase uptake of alternative fuels vehicles and infrastructure.
If you know of other national or local incentives that should be included in this section, please send us an email, or use the button on the right, and let us know. We review the proposed changes and implement the updates on a short notice.
- Purchase subsidies
Electric Car Grant (ECG) — Introduced 16 July 2025, backed by £650 million through the 2028/29 financial year.
- Grant amounts:
- Up to £3,750 for vehicle models meeting the highest sustainability criteria.
- Up to £1,500 for models meeting baseline standards.
- Eligibility criteria:
- New battery electric vehicles (BEVs) priced at £37,000 or less (RRP).
- Zero tailpipe CO₂ emissions.
- Minimum WLTP driving range of 100 miles.
- Robust battery or fuel-cell warranty (e.g., 8 years or 100,000 miles, with battery capacity guarantees).
- Manufacturers must hold verified Science Based Targets and meet embodied carbon thresholds.
- Grant amounts:
- Registration tax benefits
Vehicle Excise Duty (VED):
- For zero-emission cars registered from 1 April 2025, the first-year rate is £10.
- Ownership tax benefits
Vehicle Excise Duty (VED):
- From April 1, 2025, new zero-emission cars are subject to a first-year VED of £10, followed by a standard annual rate of £195.
- EVs with a list price over £40,000 are now subject to the Expensive Car Supplement of £425 annually for five years.
- Company tax benefits
Benefit-in-Kind (BiK) Tax:
- A 2% BiK rate applies to electric company cars until April 2028, after which it will progressively increase.
First-Year Capital Allowances:
- Businesses can claim 100% first-year capital allowances on new zero-emission cars until March 31, 2026.
- AF infrastructure incentives
'Electric Vehicle Homecharge Scheme (EVHS): Provides grants for homeowners in apartments and renters to install home chargepoints.
Workplace Charging Scheme (WCS): Covers up to 75% (maximum £350 per socket) of the cost to purchase and install workplace EV chargepoints, up to 40 sockets.
Infrastructure Expansion: Significant investments have been made to expand the UK's charging infrastructure, with over £500 million allocated to projects across various regions.
- Announced policy changes (effective later in 2025 and after)
Zero Emission Vehicle (ZEV) Mandate:
- The government has adjusted the ZEV mandate, allowing more flexibility for manufacturers and reducing fines for non-compliance by 20%.
Public Investment:
- A commitment of £2.3 billion has been made towards tax breaks for EV buyers and improving charging infrastructure.
Electric Car Grant Expansion & Vehicle Eligibility
- Ongoing expansion of eligible models: On 9 August 2025, thirteen additional models from Nissan, Renault, and Vauxhall joined the Electric Car Grant (ECG) scheme at the £1,500 tier, raising total eligible models to at least 17.
- Grant window and supply: The ECG remains open until funding runs out or the 2028/29 financial year concludes, allowing manufacturers to submit applications on a first-come, first-served basis. Already, OEMs can submit orders from as early as 11 August 2025.
Taxation and Mandate Updates
- Incremental BiK tax adjustments:
- Benefit-in-Kind (BiK) rates for company cars are set to rise gradually, moving from 3% in 2025/26 to 9% by 2029/30.
- Relaxation of ZEV mandates:
- The government is easing EV sales penalties (e.g., fines reduced from £15,000 to £12,000 per non-compliant vehicle), extending the acceptance of hybrid vehicle sales up to 2035.
- Small-volume manufacturers (e.g., under 2,500 units/year) are granted exemptions from hybrid restrictions.
- A £2.3 billion investment boost will further support tax incentives and charging infrastructure.
- Interesting links