Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment her Department has made of the potential impact of salary sacrifice schemes on the (a) affordability and (b) uptake of electric vehicles among (i) lower and (ii) middle-income drivers.

HMRC publishes annual statistics which provide information about the company cars provided as benefits in kind to employees by employers, including the proportion of the company car stock which is electric. The most recent statistics were published in June 2024 for the tax year 2022-23, which showed that 220,000 company cars were fully electric, or 29% of the total company car stock, an increase from 50,000 in 2020-21.

The Government recognises that Company Car Tax Regime and salary sacrifice exemption for ultra-low and zero emission vehicles continues to play an important role in the EV transition. The Government is committed to supporting the transition to electric vehicles, and generous company car tax rates for electric cars have been a key incentive for increasing their number on the road. Electric company cars also play a significant role in supporting the used EV markets. At the end of their lease company cars are sold into the used markets, which is where the majority of car sales take place in the UK.

More widely, the UK has a range of measures to support people to transition to zero emission vehicles, including the plug-in grant for vans and support for charging infrastructure across all of England.

The Government has more recently announced the new Electric Car Grant, which supports drivers to purchase ZEVs with grants of up to £3,750. The grant will help save drivers money and get more of them buying EVs, whilst helping the Government to deliver its environmental commitments.

The Government keeps all taxes including benefit in kind taxation of electric vehicles under review.