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Plug-in Car Grant to continue beyond 2020

The Plug-in Car Grant will be extended to 2020 a Department for Transport spokesperson has said, but the levels of the grant have still to be confirmed
Renault Zoe qualifies for the Plug in Car Grant
Renault Zoe: voted Best SME Green Company Car qualifies for the Plug-in Car Grant

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13 July 2018

THE Department for Transport (DfT) has confirmed that the Plug-in Car Grant will continue in some form beyond 2020.

The Plug-in Car Grant is provided by the Office for Low Emission Vehicles (OLEV) to encourage drivers into ultra-low emission vehicles.

In the Government’s Road to Zero publication (July 2018), the DfT confirmed that the current car and van plug-in grants would be maintained at their current rates until October 2018. The DfT said that further incentives would continue after that date until ‘beyond 2020’, but no levels have been mentioned.

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Information update: since publishing this story the Government has announced the new levels of Plug-in Car Grant funding: click here for Government cuts Plug-In Car Grant – PHEVs no longer eligible. 

The original extension to the grant, which was announced towards the end of 2015, ended in March 2018. When we contacted the DfT in March they told us: “The current grant rates will be maintained until at least the end of April 2018.”

However, since then there has been a degree of confusion for businesses, company car drivers and consumers who order their qualifying vehicle post March 2018, with the potential loss of up to £4500 in the Plug-in Car Grant.

However, this statement brings clarification for drivers wishing to go zero emission or ultra low emission. At least until October. It suggests drivers should not delay in ordering their cars to take full advantage of the current Plug-in Car Grants.

What are the current Plug-in Car Grants?

  • Vehicles with a zero-emission range greater than 70 miles receive a grant of £4,500.
  • Vehicles with a shorter zero-emission range will receive £2,500 provided they cost less than £60,000.
  • There is 20% off the cost of an electric van, up to a maximum of £8000.

The grant was originally created in 2011. Its rates were revised for March 2016 and qualifying cars split into three categories.

Category 1 qualifying cars

These cars must be able to travel a minimum of 70 miles in zero emission mode and emit less than 50g/km of CO2. The grant available is 35% of the purchase price, capped at £4500.

Category 2 qualifying cars

These cars must be able to travel more than 10 miles in zero emission mode and emit less than 50g/km. The grant available is 35% of the purchase price capped at £2500. Cars with a retail price over £60,000 are not eligible for the grant.

Category 3 qualifying cars

These cars must be able to travel at least 20 miles in zero emission mode and have CO2 emissions of 50-75g/km. The grant available is 35% of the purchase price capped at £2500. Cars with a retail price over £60,000 are not eligible for the grant.

Vans category

To qualify for the grant, vans must have emissions below 75g/km and the ability to travel in zero emission mode for at least 10 miles. The grant available is 20% of the purchase price capped at £8000.

How to apply for a Plug-in Car Grant

You don’t. The dealer will do the paperwork for you by including the value of the grant in the vehicle’s price. For businesses that are leasing their cars, the lease price will reflect the inclusion of the grant.

What about company car tax on a Plug-in Car Grant vehicle?

While the acquisition price of the car is reduced with the Plug-in Car Grant, this has no effect on company car tax.

Company car tax is based on the P11D value of the car.

Companies that lease a qualifying Plug-in Car Grant car also have to pay Class 1A NIC on the benefit. Again this is based on the P11D (not minus the grant) multiplied by the relevant BIK percentage rate and then multiplied by 13.8% to give the final Class 1A NIC due.

Which low emission cars are eligible for the Plug-in Car Grant?

The DfT has a full list of the qualifying cars. You can see them here: https://www.gov.uk/plug-in-car-van-grants/what-youll-get

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Ralph Morton

Ralph Morton

Ralph Morton is an award-winning journalist and the founder of Business Car Manager (now renamed Business Motoring). Ralph writes extensively about the car and van leasing industry as well as wider fleet and company car issues. A former editor of What Car?, Ralph is a vastly experienced writer and editor and has been writing about the automotive sector for over 35 years.

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