Question to the Department for Transport:

To ask the Secretary of State for Transport, what assessment his Department has made of the potential merits of extending the Plug-in Car Grant beyond March 2023 to support SMEs with their transition to net zero vehicles.

Since 2010, the plug-in car grant has provided over £1.3 billion to support the early market for ultra-low emission vehicles. The grant provides up to £1,500 for those making the switch to eligible electric cars. Both businesses and private customers are eligible to benefit from the grant discount as long as they are based in the UK. In 2021 industry statistics show that battery electric vehicles were 11.6 per cent of the new car market, up 76.3 per cent on 2020.

The increasing choice of new vehicles, growing demand from customers, and rapidly rising number of chargepoints means that while the level of funding remains as high as ever, we are re-focusing our vehicle grants on the more affordable zero emission vehicles – where most consumers will be looking and where taxpayers’ money will make more of a difference.

Building on the £1.9bn from Spending Review 2020, the Government has committed an additional £620m to support the transition to electric vehicles. The additional funding will support the rollout of charging infrastructure, with a particular focus on local on-street residential charging, and targeted plug in grants.

There are also incentives in the tax system to stimulate uptake of zero emission vehicles. The March 2020 Budget extended the favourable benefit in kind tax rates for zero emission vehicles to 2025: company car tax is 1 per cent in 2021/22 and 2 per cent in 2022/23 through to 2024-25. Further, all zero emission cars are exempt from vehicle excise duty (VED) and zero emissions vans pay a nil rate of tax on the van benefit charge.

We have been clear since 2018 that the plug-in grants will eventually end and that we keep all grants under review to ensure the best value for taxpayers’ money.