April changes to VED will push up rentals

Company Fleet  Driver Guides  Electric Vehicles  HMRC / Tax  Low Emission Vehicles 

From April the rates of Vehicle Excise Duty (VED) - more commonly known as road tax - will change, increasing costs across the board.

For companies the three most important changes are:

• the change to the initial tax on zero emission vehicles;
  
  
• the move to standard tax rate in year 2 for zero emission cars;
  
  
• and the loss of the Expensive Car Supplement discount for zero emission cars costing more than £40,000.

For 01 April 2025, the standard tax rate for cars with 0g/km is £10; from year 2 this will be £195 per year. On a three year lease this adds £392 to the cost of a car.

But there’s more.

Until now electric cars with 0g/km emissions have been exempt from the Expensive Car Supplement, but from 01 April 2025 any zero emission car that costs more than £40,000 will be required to pay the Supplement for the first five years of registration, adding an additional £395 to the VED.

So a three year lease on an EV could now cost an additional £1,577 over a three year lease.

“These VED cost rises are significant for companies,” says Operations Director of Gateway2Lease, Rob Marshall. “And while £40,000 might sound a lot for a car, many EVs fall into this bracket. So we’re keen to inform our customers that they should expect some increases - both for electric cars, as well as cars that run on petrol and diesel.” Marshall was keen to point out that the VED changes affected all cars.

“There are significant uplifts in VED for all classes of vehicle. For example, the Citroen C3 with CO2 emissions of 128g/km will see its first year VED double from £220 to £440. At the other end of the scale, a Range Rover 4.4 V8 P530 Supercharged Autobiography will leap from £2,745 to £5,490.”

Here are some cars, taken from the Gateway2Lease Offers section, that are below and above the Expensive Car Supplement and those that are above.

Below the Expensive Car Supplement

• Renault 5 E-Tech 5DR Hatch 90kW Evolution 40kWh Urban Range Auto £22,240
• Cupra Born 59kWh 230ps V1 e-BOOST DSG £35,440
• Volvo EX30 200kW 69kWh Plus Single Motor Extnd Range Auto £38,995

Above the Expensive Car Supplement

• Renault Scenic E-Tech 160kW Techno Long Range Auto £40,240
• Peugeot E-3008 Suv 73kWh 210 GT £48,275.00
• Volkswagen ID 7 77kWh 286ps Pro Match Auto £50,670

Gateway2Lease added that it was important for fleets and businesses to remain focused on the overall running costs of electric cars, and that while VEd changes from April will push up the operating costs, relative to combustion cars they remain better value.

Marshall added: “EVs attract low BIK so the Class 1a NICs are much lower for employers, while there is a 100% write down on corporation tax for zero emission cars. EVs also play an integral role in the decarbonisation of fleets, which is central to many company ESG plans.”

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