First-year allowance for electric vehicle charge-points
Published 15 March 2023
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This publication is available at https://www.gov.uk/government/publications/first-year-allowance-extension-for-electric-vehicle-charge-points/first-year-allowance-for-electric-vehicle-charge-points
Who is likely to be affected
Businesses installing new electric vehicle charge-points.
General description of the measure
This measure will extend the availability of the 100% first-year allowance (FYA) for qualifying expenditure on plant and machinery (equipment) for electric vehicle charge-points by two years - to 31 March 2025 for Corporation Tax purposes, and to 5 April 2025 for Income Tax purposes.
Policy objective
This measure is designed to continue to incentivise the uptake of equipment for charging electric vehicles and aligns the period of its availability with the 100% FYAs available for zero-emission cars and zero-emission goods vehicles.
Background to the measure
This FYA was introduced for expenditure incurred from 23 November 2016 to support the UK transition to cleaner vehicles.
Detailed proposal
Operative date
For Corporation Tax purposes this measure will have effect for expenditure incurred on or after 1 April 2023 and will expire on 31 March 2025. For Income Tax purposes it will have effect for expenditure incurred on or after 6 April 2023 and will expire on 5 April 2025.
Current law
The current law is contained in section 45EA of the Capital Allowances Act 2001.
Proposed revisions
Legislation will be introduced in the Spring Finance Bill 2023 to extend this FYA by two years.
Summary of impacts
Exchequer impact (£m)
| 2022 to 2023 | 2023 to 2024 | 2024 to 2025 | 2025 to 2026 | 2026 to 2027 | 2027 to 2028 |
|---|---|---|---|---|---|
| -5 | -25 | -30 | -5 | +5 | +10 |
These figures are set out in Table 5.1 of Autumn Statement 2022 and have been certified by the Office for Budget Responsibility. More details can be found in the policy costings document published alongside Autumn Statement 2022.
Updated estimates consistent with Spring Budget 2023 forecasts can be found in Table 4.2 of Spring Budget 2023.
Economic impact
This measure is not expected to have any significant macroeconomic impacts.
Impact on individuals, households and families
This measure is not expected to impact on individuals or households as capital allowances can only be claimed in the course of business.
The measure is not expected to impact on family formation, stability or breakdown.
Equalities impacts
It is not expected that there will be adverse effects on any group sharing protected characteristics.
Impact on business including civil society organisations
This measure is expected to have a negligible impact on an estimated 2,100 businesses by continuing to provide an increased level of tax relief for expenditure on installing new equipment for electric vehicle charge-points at 100% of the cost for the tax period in which the expenditure was incurred.
One-off costs to businesses could include updating software as a result of the change. There are not expected to be any continuing costs.
Continuing savings could include businesses not having to calculate tax relief through writing down allowances in future tax periods against the purchase costs of equipment for electric vehicle charge-points.
Small and micro business (SMB) assessment: the extension to this FYA is expected to benefit the largest SMBs whose investments in plant and machinery regularly exceed the permanent £1,000,000 limit of the Annual Investment Allowance.
Customer experience could see an improvement as calculating capital allowances for purchases of electric vehicle charge-point equipment will be simpler.
It is not expected to impact on civil society organisations.
Operational impact (£m) (HMRC or other)
There will be HMRC operational costs which are estimated to be £1.7 million.
Other impacts
This measure has a behavioural impact by incentivising businesses to install charging points and therefore purchase zero emission vehicles to support the government’s wider objective on climate policy to reduce greenhouse gas emissions to net zero by 2050.
Other impacts have been considered and none identified.
Monitoring and evaluation
This measure will be monitored through information collected of claims for this FYA and through engagement with businesses and affected groups.
Further advice
If you have any questions about this change, please contact HMRC on e-mail: contact.capitalallowances@hmrc.gov.uk.