Many fleets are still unaware of substantial hikes in vehicle excise duty (VED) charges on electric vehicles (EVs) and plug-in hybrids (PHEVs) from April, the Association of Fleet Professionals (AFP) has reported.

The online salary sacrifice course is aimed at fleet managers and leasing company staff

The increases, announced by the Chancellor in the 2024 Autumn Budget, will hit organisations that operate EVs and PHEVs. Some will see their liability on widely adopted EVs rise per vehicle from zero to £2,490 over a five-year period.

First-year VED rates will rise from zero to £10 for EVs and from zero to £110 for PHEVs emitting between 1-50g/km of CO2. Second-year rates will rise more dramatically for EVs – from zero to £195.

Also, EVs that are registered from 1 April will now also become liable for the additional rate ‘Expensive Car Supplement’ VED for all vehicles costing more than £40,000, which will be £425 per year for five years from the second time the vehicle is taxed.

James Pestell, AFP director, said the association was flagging up the changes as feedback suggests many fleets simply haven’t appreciated and accounted for these increases, which will mount up when applied across entire fleets operating dozens, hundreds or thousands of EVs and PHEVs.

James Pestell, AFP director

“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.”

He added that taken together, the VED increases represented a major jump in costs for EVs.

“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 will be holding a Tax Year End webinar on Tuesday 4 March at 10am, featuring tax specialist Harvey Perkins of HRUX and mileage reimbursement expert Barry Monks of TMC.

The webinar will cover VED issues and more including the P11D process, PHEV Benefit-in-Kind changes, double cab pickups, car allowance payments, what is a business mile, and CO2 tax changes from 2028. More details can be found here.