Changes to Vehicle Excise Duty and the Luxury Car Tax for electric cars

Changes to Vehicle Excise Duty and the Luxury Car Tax for electric cars

Posted by

Andy Bruce

April 2025

Electric car (EV) customers need to be aware of two important changes to Vehicle Excise Duty (VED) – more commonly known as road tax – which came into effect from 1st April 2025.

A change in standard VED

Electric cars have been exempt from VED, but from April 2025 they are now subject to what the government calls the standard annual rate for certain petrol/diesel cars of £195 from year 2 onwards. The first-year tax of £10 will be included in a customer’s rental.

EVs that have already been delivered through Fleet Alliance may be charged the standard annual VED rate from April this year when it falls due. Where applicable, the vehicle funder will invoice the £195 for each separate vehicle in a customer’s fleet.

The Expensive Car Supplement – how it affects EVs

Until now EVs have been exempt from the Expensive Car Supplement, also known as the Luxury Car Tax, unlike petrol and diesel cars. However, from 1st April 2025 all new EVs registered with a list price in excess of £40,000 will be subject to the Expensive Car Supplement. This is currently priced at £425 per year and runs from year 2 to year 6 of the car’s life.

In cases where the list price of the EV is below the £40,000 starting rate of the Expensive Car Supplement, but optional extras increase the value beyond £40,000, then the Expensive Car Supplement will apply.

EVs registered before 1st April 2025 will not be subject to the Expensive Car Supplement but will still be liable for the new VED rates, which could result in a sizeable increase in operating costs for larger fleets.

To discuss if these changes affect vehicles on your fleet, speak to a Fleet Alliance representative on 0345 601 8407.


You also might like…

If you liked this article then check out our posts about similar topics

Electric cars claim record first half share at Fleet Alliance

Electric cars and hybrids claimed a record 81% market share in the first half of this year at Glasgow-based fleet manage...

Fleet Alliance is one of the UK’s Best Workplaces in the Financial Services & Insurance industry

If you want to work in one of the UK’s Best Workplaces, then head for Skypark where Fleet Alliance is headquartered Wh...

From Zero Pipeline to Record Breaker

6 Months as a Fleet Alliance Appointed Representative Six months on from gaining my FCA authorisation to act as an Appo...

The Supreme Court judgement on motor finance and how it affects Fleet Alliance customers

Last week the Supreme Court ruled on three motor finance cases The finance involved was for used cars supplied by car de...

Rethinking Fleet Strategy in a Changing Landscape

Managing a corporate fleet has never been more complex or more critical to business performance From shifting market dyn...

Aviation specialist Aermach selects Fleet Alliance for EV salary sacrifice scheme

Cardiff-based aviation specialist Aermach has chosen Fleet Alliance to launch a highly tax-efficient electric vehicle sa...

First Drive: Kia EV3, the Company Car Game Changer

Why it matters Fresh from scooping both ‘Car of the Year’ and ‘Best Mainstream Electric Car’ at the 2025 AutoTr...

Fleet Alliance named a Best Workplace for Women in 2025

I’m delighted to share that Fleet Alliance has been named a Best Workplace for Women in the 2025 certification ranking...

Ready to make the management of your fleet more efficient?

Request a call back


Or Call Us On: 0345 601 8407
Schedule a call back