The plug-in car grant will be cut by £1,000 and no longer apply to hybrid cars with a range of less than 70 zero emission miles, from November 12.
The Government said the reduction in funding – from £4,500 to £3,500 – for the cleanest cars, and withdrawing the grant completely for the likes of the Mitsubishi Outlander PHEV and the Toyota Prius Plug-in, was a sign of its success.
The 22% cut in grant value for the cleanest cars also reflected the “recent reductions in the price of electric vehicles”, it claimed.
Furthermore, the Department for Transport (DfT) warned that it would be prepared to implement the new rate before November 12, if the news sparked a rush from buyers eager to qualify for the grant at current levels. However, it has only committed to fund the “next 35,000 of the cleanest vehicles”, according to the official announcement.
First introduced in 2011, the plug-in car grant (PICG) has provided a discount to the price of more than 160,000 new ultra-low emission vehicles.
Category 1 cars, with CO₂ emissions of less than 50g/km and a zero emission range of at least 70 miles, received 35% off the purchase price, up to a maximum of £4,500.
Meanwhile, category 2 cars, with CO₂ emissions of less than 50g/km and a zero emission range between 10 and 69 miles, as well as category 3 cars, with CO₂ emissions of 50 to 75g/km and a zero emission range of at least 20 miles, benefitted from a grant for 35% of the purchase price, up to a maximum of £2,500.
It has helped the plug-in hybrid market become more established, but the Government says it now wants to focus its support on zero emission models like pure electric and hydrogen fuel cell cars.
However, the cut in funding for ultra-low emission vehicles comes after the Government had already been warned that if it is to stand a chance of achieving its Road to Zero pledge of half of all new cars being ultra-low emission by 2030, it must bring forward planned reductions in company car tax rates and provide guarantees it will stay low.
Company car drivers considering a pure electric or hybrid car face a three-percentage point increase in benefit-in-kind (BIK) tax rates from next April, before rates fall the following year.
To see which vehicles qualify for the grant please click here
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