VED rises and EV tax gap narrows as fleet costs edge up

Vehicle excise duty has increased from 1 April, with the standard annual rate now £200 and first year charges for high emission cars reaching £5,690. At the same time, company car tax on electric vehicles rises to 4% from April 6, adding a small monthly cost for drivers.

On their own, these changes are incremental. Taken together, they point to a clearer shift. Electric vehicles are moving closer to parity with petrol and diesel in the tax system.

For fleets, the impact is less about headline cost and more about planning. Even modest increases compound across large vehicle numbers, particularly where replacement cycles and funding models are already under pressure.

There are some offsets. The expensive car supplement threshold for electric vehicles has increased to £50,000, bringing more mid range models into scope and improving affordability at the margin.

The practical takeaway remains the same. Total cost of ownership matters more than ever. Fleets that rely on list price or headline lease costs, along with tax rates, risk missing the bigger picture.

Well structured leasing, salary sacrifice schemes and lifecycle planning remain the most effective way to absorb these changes. They help smooth volatility and maintain flexibility as policy continues to evolve.

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