Fleets Unaware of April EV Tax Increases: What You Need to Know

Greetings, Net Zero News Community,

As we advance towards a more sustainable future, the landscape of electric vehicles (EVs) and plug-in hybrids (PHEVs) is undergoing significant changes that could impact fleet operators across the United Kingdom. Recent revelations from the Association of Fleet Professionals (AFP) indicate a concerning lack of awareness among fleet operators regarding the upcoming adjustments to the Vehicle Excise Duty (VED) for EVs and PHEVs, set to take effect in April.

The Chancellor of the Exchequer revealed these changes in last year’s Budget, and the implications for businesses operating electric vehicles are substantial. This shift may result in some organisations facing a staggering increase in their VED liabilities, with costs on commonly used EV models escalating from zero to an eye-watering £2,490 over the course of five years.

To break this down further, first-year VED rates for electric vehicles will rise from zero to £10. For PHEVs that emit between 1-50g/km of CO2, the initial charge will jump from zero to £110. The rates continue to climb, with second-year taxes for EVs increasing from zero to £195. These changes signal a significant shift in the financial responsibilities associated with operating EVs and PHEVs, particularly for fleet managers who may have previously enjoyed a zero-tax status on their vehicles.

Moreover, a new stipulation will see all EVs registered from 1 April 2024 becoming liable for an additional rate of VED if their price exceeds £40,000. For such vehicles, an added charge of £425 will be enforced during the second to the fifth years of the car’s life, further complicating the financial landscape for fleet operators.

James Pestell, the director of the AFP, has voiced his concerns regarding this oversight, stating, “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.” His comments highlight a critical issue that could affect budgeting and financial planning for many organisations.

Pestell continues, “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.” This proactive approach aims to prepare fleet operators for the financial adjustments they will need to make in the near future.

He adds further insight into the implications of these changes, noting that “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.” This increase could pose significant financial challenges for fleets that have invested heavily in electric vehicles, particularly those that fall into this price bracket.

As we navigate these changes, it is crucial for fleet operators to stay informed and to reassess their budgets and operational strategies. The transition to electric vehicles is essential for achieving our net-zero goals, but understanding the financial implications of these vehicles is equally vital. Fleet managers must now incorporate these new tax responsibilities into their financial planning to avoid unexpected costs and ensure their operations remain sustainable.

This shift in tax policy underscores the need for continuous education and awareness within the fleet management sector. As electric vehicles become increasingly prevalent, it is essential for stakeholders to remain vigilant about regulatory changes that could affect their operations. The AFP’s initiative to raise awareness about the new VED charges is a timely reminder of the importance of proactive management in the face of evolving legislation.

In conclusion, as we strive towards a net-zero future, understanding the financial landscape surrounding electric vehicles is paramount for fleet operators. The changes to Vehicle Excise Duty represent not only a new financial burden but also an opportunity for businesses to reassess their strategies and embrace sustainable practices that align with the UK’s climate goals. As the fleet sector adapts to these changes, collaboration and knowledge-sharing will be key to overcoming the challenges ahead.

Let us continue to support each other in our journey towards a more sustainable future. Stay informed, stay proactive, and together, we can champion the net-zero movement.