Budget 2025 – the key points for fleets and EV salary sacrifice drivers

The 2025 Budget confirms what many in the fleet and salary sacrifice world have been expecting for some time: as electric vehicles move into the mainstream, the way the government raises motoring tax is evolving.

The good news is that, even with the newly announced mileage-based charge, electric company cars and salary sacrifice EVs remain one of the most tax-efficient and cost-effective ways to drive.

A new ‘pay-per-mile’ charge from April 2028

The government has confirmed that from April 2028, electric and plug-in hybrid cars will move onto a simple ‘pay-per-mile’ road charge:

• Battery electric cars: 3p per mile
• Plug-in hybrids: 1.5p per mile

For a typical EV driver this works out to about £255 a year – around half the equivalent fuel duty bill for petrol or diesel.

Crucially, this change is several years away, giving fleets and drivers plenty of time to plan and allowing providers to build the costs into future quotations.

EV company car and salary sacrifice drivers still come out ahead

For company car and salary sacrifice drivers, EVs remain highly tax-efficient: Benefit-in-Kind rates on electric cars stay far below those for conventional vehicles, and from April 2026 the ‘luxury car’ tax threshold for EVs rises from £40,000 to £50,000, so many popular models will now avoid that surcharge altogether.

This combination of low BiK, rising thresholds and relatively modest mileage charges means EV drivers continue to enjoy a strong tax advantage over petrol and diesel.

Extra support for EV affordability and residual values

Alongside this, the government is putting extra money into the Electric Car Grant and has extended it to 2030, which helps support EV pricing and residual values.

That’s particularly important for fleets and salary sacrifice, where whole-life costs and predictable future values determine how attractive monthly rentals and driver contributions can be.

The positives at a glance

For fleets, HR teams and drivers, the direction of travel is clear and still very favourable to EVs:

• EVs still taxed at about half the per-mile rate of petrol/diesel
• BiK on EVs remains much lower than on ICE, even into the late 2020s
• ECS threshold increase to £50k is genuinely good news for many EVs
• Extra grant funding and extended scheme support EV affordability and residuals
• No immediate change – and a predictable framework you can now factor into quotes

Taken together, even with the new mileage charge, EVs continue to be one of the most cost-effective choices for a company car or salary sacrifice driver, with lower tax, lower fuel costs and a clearer long-term tax framework than ever before.