Many fleets have not accounted for rising Vehicle Excise Duty (VED) payments for EVs and plug-in hybrids that are due to come into force in April, according to the Association of Fleet Professionals (AFP).
First year VED rates are being increased from zero to £10 for EVs, and from zero to £110 for PHEVs emitting between 1-50g/km of CO2, while second-year rates for EVs will go up from zero to £195.
In addition, EVs registered from 1 April which cost more than £40,000 will become eligible for the ‘expensive car supplement’ previously only applied to ICE models, meaning an extra £425 payment for each of the second to the fifth years of the car’s life.
AFP director James Pestell said: “The feedback we are receiving is that many fleets simply haven’t appreciated and accounted for these increases, which are substantial when applied across entire fleets operating dozens, hundreds or thousands of EVs and PHEVs.
“From April onwards, they’ll be receiving bills from the DVLA or shortfall invoices from their leasing supplier, and won’t have factored them into their running costs. That’s why we are flagging up this issue now.”
Pestell added that taken together, the VED increases represented a major jump in costs for EVs.
He said: “Electric cars costing over £40,000 bought after the start of April – including some of the most common models on fleets – that would have attracted no tax in 2024-25 will be liable for £2,490 during the first five years of their life. That’s a big increase.”
The AFP is holding a tax year end webinar on 4 March, featuring tax specialist Harvey Perkins of HRUX and mileage reimbursement expert Barry Monks of TMC.
