Fleets fear impact of planned electric vehicle tax hike

The ending of electric vehicle (EV) exemptions for road tax have been criticised by fleet sector, particularly for zero-emission vans.

Electric cars and vans will be subject to vehicle excise duty (VED) for the first time from April 2025, with electric cars costing more than £40,000 also attracting the Expensive Car Supplement, which is currently £410 a year.

New zero-emission cars registered on or after April 1, 2025, will be liable to pay the lowest first-year rate of VED (which applies to vehicles with CO2 emissions 1 to 50g/km) currently £10 a year.

From the second year of registration onwards, they will move to the standard rate, currently £190 a year.

Zero emission cars first registered between April 1, 2017, and March 31, 2025, will also pay the standard rate.

Zero-emission vans, meanwhile, will move to the rate for petrol and diesel light goods vehicles, meaning fleets will have to stump up an additional £335 a year for each electric van they operate.

The tax hike for EVs was announced by the Government in 2022, with Treasury estimates suggesting the changes will be worth an additional £515 million next tax year, rising to almost £1 billion (£985m) the following year and £1.595bn in 2027/28.