New Electric Car Grants: Up to £3,750 of EV Discounts
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The government has announced significant new electric car grants that will reduce the cost of eligible electric vehicles by up to £3,750, making EVs more accessible to UK drivers. This development represents a major boost for those considering an electric car salary sacrifice scheme, particularly when combined with existing tax benefits.
What Are the New Electric Car Grants?
The new electric car grants will provide discounts ranging from £1,500 to £3,750 for eligible vehicles costing up to £37,000. The grant will be based on the car’s emissions - with the most environmentally friendly vehicles set to receive the largest reductions.
This means that the cars set to benefit the most will be pure electric vehicles (EVs), priced under £37,000. The grants will be available directly at dealerships (or point of sale) when purchasing a new electric car.
This £650m government scheme will run for three years and will allow buyers to claim the discount immediately at the point of purchase, rather than through a complex application process. Carmakers can apply for funding from Wednesday 16th July, with the RAC indicating that discounted cars should start appearing at dealerships "within weeks."
These grants incentivise the cleanest manufacturers, meaning that brands must commit to a Science-Based Target (SBT) and have a history of real emissions reduction progress in order to qualify for this discount. The greenest cars will get the full £3,750, whilst others that aren’t as climate-friendly may still access a £1,500 discount.
This means that nearly 50 new EV models will be able to qualify for the full grant - brining unprecedented cost savings to drivers around the UK - as long as their manufacturers meet the criteria.
The grants are part of the government's broader strategy to encourage drivers to move away from petrol and diesel vehicles, supporting the pledge to ban the sale of new fully petrol or diesel cars and vans from 2030.
Why Are These Grants Being Introduced?
The government is introducing these grants to address several key challenges in electric vehicle adoption:
Accelerating EV Sales:
Currently, the industry is running at 21.6% electric vehicle sales, falling short of the government's target of 28% for this year. The grants aim to bridge this gap by making EVs more financially attractive to consumers.
Addressing Charging Infrastructure Concerns:
With around 82,000 public charging points serving 1.3 million electric cars currently on Britain's roads, the government recognises that affordability and infrastructure must work together. Transport Secretary Heidi Alexander has committed £63m to fund additional EV charging points alongside these vehicle grants.
Supporting the 2030 Transition:
As the deadline for banning new petrol and diesel car sales approaches, these grants provide crucial support to help drivers make the switch to electric vehicles before the deadline takes effect.
Reducing Financial Barriers:
With 40% of UK households lacking a driveway, many potential EV buyers face additional costs for charging solutions. These grants help offset some of these concerns by reducing the upfront vehicle cost.
When Will the Grants Be Available?
The grants became available for carmaker applications from Wednesday, with discounted vehicles expected to appear at dealerships "within weeks" according to the RAC. The scheme will run for three years, providing sustained support for electric vehicle adoption through to 2028.
This timeline aligns with the government's broader electrification strategy, ensuring grants are available during the crucial period leading up to the 2030 ban on new petrol and diesel vehicle sales.
How These Grants Affect Salary Sacrifice Electric Cars
The new electric car grants significantly enhance the value proposition of salary sacrifice electric car schemes. When combined with existing salary sacrifice benefits, drivers can achieve unprecedented savings on electric vehicle costs.
Monthly Savings Breakdown:
The £3,750 grant spread over a typical three-year lease reduces monthly costs by approximately £104, when applied to a car valued at under £37k.
For basic rate taxpayers using salary sacrifice: £75 monthly savings
For higher rate taxpayers using salary sacrifice: £60 monthly savings
Combined Benefits: When you combine these grants with existing salary sacrifice advantages, the total savings become substantial:
20-50% savings through salary sacrifice schemes
3% Benefit-in-Kind rate for electric vehicles (compared to up to 37% for petrol/diesel cars)
Reduced National Insurance contributions through salary sacrifice
Example Calculation: A £35,000 electric car eligible for the full £3,750 grant through salary sacrifice could see:
Monthly lease cost reduction: £104 (from the grant)
Additional tax savings: £75 per month (basic rate taxpayer)
Total monthly benefit: £179 from the grant alone
This represents an annual saving of £2,148 just from the grant, on top of the existing 20-50% savings from your salary sacrifice car scheme.
Best Cars Under £37,000 to Maximise Savings
To qualify for the maximum grant benefits, vehicles must cost under £37,000 and meet specific environmental criteria. Here are the best electric cars available through The Electric Car Scheme that maximise your savings:
Best Value Electric Cars:
Starting from approximately £15,000, this budget-friendly car will remain the cheapest new EV on the market at approximately £11,250 with the grants applied.
There are various trims available under for £37,000 - with the starting price of around £30,860 - further reduced to £27,110 with the grants applied. Benefitting from more refinement and performance than the lowest priced EVs on the market - the ID.3 presents a sensible choice for many types of drivers.
Priced at £22,995 currently - this refreshed classic is a highly sought-after EV for drivers wanting a modern, capable, and compact vehicle to take them around town. Applying the grant would make this EV even more affordable - at just £19,245.
Starting from approximately £26,995 - the MG4 is one of the most popular affordable EVs available to date - with plenty of cabin space and family-friendly features. Adding the full grant could bring the price down to £23,245 - making it incredibly affordable for price-conscious drivers that do not wish to compromise on range, or space.
Premium Options Under £37,000:
Base models are available for around £30,000 - coming down to £26,250 with the full grant. The Mini Electric retains the iconic look of the traditional three-door MINI Hatchback, appealing to fans of the classic design as well as those who prefer an EV that doesn’t look too futuristic.
The base models start at £34,000, coming down to £30,250 with the grant applied. The Hyundai Kona is a great choice for both commuters and families - benefitting from premium features, a refined interior, and great space throughout.
The Electric Car Scheme: Your Gateway to Maximum Savings
At The Electric Car Scheme, we're committed to helping you maximise every available saving on your transition to electric driving. Our salary sacrifice electric car scheme works seamlessly with these new government grants, ensuring you benefit from comprehensive support.
We provide expert guidance on accessing the full £3,750 grant alongside our award-winning salary sacrifice service. Our Complete Employer Protection safeguards businesses from unexpected costs, whilst employees enjoy our 5-star rated customer service.
Choose The Electric Car Scheme for the best prices available, zero setup costs for employers, and a comprehensive package - including The Charge Scheme for charging savings. We also offer optional home charger installation, and comprehensive insurance.
As the award-winning salary sacrifice provider, we deliver complete solutions that maximise your savings from both government grants and salary sacrifice benefits.
Ready to Save?
With the new grants reducing costs by up to £3,750 and salary sacrifice schemes offering 20-50% savings, there's never been a better time to switch to an electric car. Combined with the current 3% Benefit-in-Kind rate, UK drivers can access premium electric vehicles at unprecedented affordability.
For Employers: Book a demo to discover how our electric car scheme can enhance your employee benefits package while supporting your sustainability goals.
For Employees: Get an instant quote to see how much you could save on your perfect electric car with the new grants and salary sacrifice benefits combined.
The transition to electric driving has never been more affordable or accessible. Let The Electric Car Scheme help you navigate the new grant system and maximise your savings on the journey to sustainable motoring.
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Last updated: 15/07/2025
Our pricing is based on data collected from The Electric Car Scheme quote tool. All final pricing is inclusive of VAT. All prices above are based on the following lease terms; 10,000 miles pa, 36 months, and are inclusive of Maintenance and Breakdown Cover. The Electric Car Scheme’s terms and conditions apply. All deals are subject to credit approval and availability. All deals are subject to excess mileage and damage charges. Prices are calculated based on the following tax saving assumptions; England & Wales, 40% tax rate. The above prices were calculated using a flat payment profile. The Electric Car Scheme Limited provides services for the administration of your salary sacrifice employee benefits. The Electric Car Scheme Holdings Limited is a member of the BVRLA (10608), is authorised and regulated by the FCA under FRN 968270, is an Appointed Representative of Marshall Management Services Ltd under FRN 667174, and is a credit broker and not a lender or insurance provider.
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