Introduction
Starting from April 1, 2025, electric car owners in the UK will face a significant change in vehicle taxation. Any newly registered electric vehicle (EV) with a list price of £40,000 or above will no longer be exempt from the expensive car supplement road tax. This means that a vast majority of new EV owners could end up paying an additional £2,050 over five years.
With 70% of new electric vehicles registrations in January 2025 exceeding this price threshold, this tax shift will affect both individuals and businesses. If you are considering an electric vehicle lease, now is the perfect time to explore your options before these additional costs kick in.
Why Is This Happening?
The UK government announced this change as part of the Autumn Budget Statement in 2022. According to former Chancellor Jeremy Hunt, the move aims to ensure a fairer motoring tax system, given that nearly half of all new cars sold will be electric by 2025.
Previously, electric vehicles enjoyed tax benefits to encourage widespread adoption, but as they become mainstream, the government is adjusting its taxation policies to maintain road tax revenue.
Who Will Be Affected?
This tax applies to:
-
All new electric vehicles registered from April 1, 2025, with a list price over £40,000
-
Fleet and business electric vehicle buyers, who accounted for 78.9% of registrations in early 2025
-
Private buyers looking to purchase or lease a premium electric car
-
Existing EV owners will also start paying standard Vehicle Excise Duty (VED) from the same date
Impact on Business & Fleet Owners
Since fleet and business registrations make up the majority of new EV sales, this tax will significantly affect leasing costs. Business Contract Hire (BCH) customers will need to factor in higher monthly lease payments to accommodate the added tax expenses.
Key Concerns for Businesses
-
Increased fleet costs
-
Higher lease repayments
-
Potential shift towards lower-priced electric vehicles, but this could cause employee dissatisfaction.
How to Minimize Costs?
To offset these costs, consider:
-
Taking delivery of your electric vehicle before April 2025 to lock in lower costs.
-
Exploring models under £40,000 to avoid the surcharge.
-
Choose business contract hire (BCH) lease deals and personal contract hire (PCH) lease deals, which distribute tax costs more efficiently.
Avoid a factory order - take a pack deal offer instead
If you want a very specific car and colour ie a factory order, you will pay a lot more than the same equivalent car if a batch deal appears. A batch deal is a large batch of pre-ordered cars by one of our funders, they are usually in one specification and are available in a choice of colours, they offer huge savings over the same factory order option, sometimes up to 35% cost saving.
All manufacturers are doing more batch deals as they need to hit their CO2 registration targets for the next few years ie in 2024 it was 22% of all their cars had to be full electric, in 2025 it will rise to 25%. Most of our orders will be for clients ordering cars from these batch deals, and these deals come in every week. The Cupra Tavascan (pictured above), was part of one of these huge cost saving batch deals.
Alternative Leasing Options
Leasing remains a cost-effective way to drive an electric vehicle without worrying about long-term depreciation. Every Vehicle Lease offers competitive Business Contract Hire (BCH) and Personal Contract Hire (PCH) deals, allowing you to drive the latest electric vehicles within your monthly budget.
Check out our latest EV leasing offers today! Every Vehicle Lease Special Offers