How VED Changes Could Affect Thousands of UK Electric vehicles
How Many Vehicles Could Be Impacted by the Proposed VED Threshold Changes for EVs?
The UK Treasury is reportedly considering raising the £40,000 threshold for the Vehicle Excise Duty (VED) supplement on electric vehicles (EVs) in a move that could impact thousands of company car drivers and fleet operators.
So how many vehicles might actually be affected if this policy is implemented? And what does it mean for fleets?
Let’s unpack the implications.
The Current Rule: VED Supplement from 2025
From April 2025, EVs lost their exemption from VED and be subject to the standard rates including the £390/year ‘expensive car supplement’ for vehicles with a list price over £40,000. This affects even zero-emission vehicles.
As EVs are often higher in price (due to battery costs), many popular models are well above that threshold despite being environmentally efficient.
The Treasury's New Proposal: Raising the Threshold
The Treasury is reportedly reviewing whether the £40,000 threshold should be increased to reflect the price premium of EVs. No official number has been confirmed, but even a modest rise (e.g. to £50,000 or £60,000) would impact a large proportion of EVs currently on UK roads — and many more due to enter fleets in the next few years.
How Many Vehicles Could This Affect?
Based on recent SMMT and DVLA data:
- Around 1.1 million EVs are currently on UK roads (May 2025).
- Over 60% of new EVs registered in 2023–2024 had list prices above £40,000.
- Popular models like the Tesla Model Y, BMW i4, Mercedes EQB, and even some trims of the Hyundai IONIQ 5 and Kia EV6 all exceed the current VED supplement threshold.
If the threshold stays at £40,000:
- Hundreds of thousands of EV drivers will face a £390/year supplement, undermining cost advantages.
If the threshold is raised:
- This could exempt 30–50% of those vehicles from the supplement, depending on where the new limit is set.
For fleet managers, that’s a significant shift — potentially affecting budgeting, tax calculations, and driver TCO (total cost of ownership) planning.
What It Means for Fleets and Salary Sacrifice Drivers
- EV Cost Calculators Need Updating
Salary sacrifice schemes often promote tax savings but VED changes will affect year 2+ cost forecasts for many drivers. - Policy Review Recommended
Fleet managers may need to revisit banding policies and caps. If the VED threshold rises, higher-spec EVs could become more viable again. - Procurement Planning Opportunity
If the supplement is delayed or cancelled for higher-value EVs, fleets could accelerate procurement of vehicles priced between £40k–£60k before any further changes hit.
LetsTalk Fleet View
Raising the VED threshold could stimulate EV adoption, particularly for drivers who were priced out of clean technology due to tax distortions. It's a sign that the government is listening but fleets need clarity and predictability to plan confidently.
Until firm decisions are announced, it's wise to:
- Track government updates
- Review high-VED-risk vehicles in your pipeline
- Communicate transparently with drivers about cost impacts
Need Help Assessing The Impact on Your Fleet?
We’re already helping clients forecast how the 2025 VED changes could impact their electric vehicle strategy. If you’d like a quick review of your EV cost assumptions or support updating your fleet policy, let’s talk.
LetsTalkFleet can provide independent impartial advice on the all aspects of Fleet Policy for your business so please get in touch with any specific enquiries you have, we are available on
0330 056 3335 or via email [email protected] .