Automotive Business Magazine – Q2 2026 – Digital edition - Magazine - Page 73
OPINION
LEGAL
industry in 2026
are correct at the time of
sale. Market fluctuations may
also create financial conduct
considerations, particularly as
the Financial Conduct Authority
(FCA) continues to scrutinise
motor finance practices.
Environmental zone
frameworks may further
influence vehicle demand in
specific regions and could
require careful consideration in
contractual return conditions for
fleet vehicles.
Tariffs, regulation and
supply-chain disruption
Geopolitical and regulatory
developments remain central to
global automotive strategy in
2026. Reporting indicates that
new US tariffs, together with
geopolitical uncertainty and
lower demand, are contributing
to a contraction in global
automotive production.
Additional analysis shows that
tariff measures have influenced
decisions on production location
and strategy, and that these
policies form part of wider
initiatives affecting the industry.
Regulatory milestones,
particularly the introduction
of Euro 7, continue to add
complexity for manufacturers.
Industry analysis confirms
that Euro 7, along with other
regulatory developments such
as USMCA renegotiations, is
expected to shape production
strategies throughout 2026.
These pressures coincide with
continued expansion by Chinese
automakers into new markets,
which may influence competitive
dynamics for established
manufacturers.
Tariff administration also
presents an ongoing operational
consideration. Guidance issued
through US Customs and Border
Protection emphasises that
importers must calculate tariff
obligations with reference to
applicable executive orders, the
Harmonized Tariff Schedule and
other relevant legal instruments,
and that responsibility for
correct classification rests with
the importer.
Together, these factors
create an environment where
cost pressures, regulatory
compliance requirements
and the need for supply chain
resilience may affect production
timing, contractual structures
and pricing across the industry.
Any adjustments to trade
agreements or emissions
standards may require
manufacturers and retailers to
review supply arrangements,
renegotiate long-term contracts,
or reassess their compliance
strategies.
The Chancellor’s Budget
Finally, back in October 2025, the
Chancellor’s Budget introduced
sweeping changes that will
reshape fleet, leasing, and
employee car strategies as the
government accelerates its net
zero agenda.
Businesses should act now to
review their policies and prepare
for evolving tax treatment of
vehicles.
Key measures include:
A new per-mile Electric Vehicle
Excise Duty (eVED) tax on
electric and plug-in hybrid cars
from April 2028. The planned
charge will be 3p per-mile for
battery electric cars, and 1.5p
per-mile for plug-in hybrid
cars. Electric vans, buses,
coaches, motorcycles and
→ Emma Bysouth
is head of automotive and
legal director at Birketts
→ Sam Varney
is associate in the corporate
team at Birketts
→ Robbie Watson
is senior associate in the
tax team at Birketts
HGVs will initially be exempt
from the charge.
The removal of VAT relief and
the application of Insurance
Premium Tax to Motability
top-up payments from 1st July
2026, aimed at curbing luxury
leasing within the scheme.
A temporary income tax
easement for plug-in hybrids
(1st January 2025 to 5th April
2028), which will mitigate
rising benefit-in-kind (BiK)
charges due to new emission
standards.
The application of the benefitin-kind rules to Employee Car
Ownership Schemes (ECOS)
has been deferred until 6th
April 2030, giving firms more
time to adapt.
Incentives for zero-emission
investment continue, with
100% first-year allowances
for EVs and charge-points
extended to the end of the
2027 tax year.
The Vehicle Excise Duty
threshold for expensive zeroemission cars rising from
£40,000 to £50,000 from 1st
April 2026.
With deep sector expertise
and a proactive approach, the
right legal team can support
you in navigating the evolving
automotive industry.
Q2 2026
AUTOMOTIVE BUSINESS
73
