UK Tax Changes for Fleets in 2025/26: What You Need to Know
UK Tax Changes for Fleets in 2025/26: What You Need to Know
As the UK government continues to refine tax policy in support of its net-zero goals, several key changes will come into effect in the 2025/26 tax year that will impact fleet operators, company car drivers, and vehicle procurement strategies.
From the removal of VED exemptions for electric vehicles to major changes in how pickups are taxed, here’s what Fleet Operators need to watch out for.
Benefit-in-Kind (BIK) Tax: Gradual Increases Ahead for Cars
BIK rates for company cars have already been confirmed up to 2027/28, offering a degree of stability for fleet planning though .
- Electric Vehicles (EVs):
- 2024/25: 2%
- 2025/26: 3%
- 2026/27: 4%
- 2027/28: 5%
- 2028/29: 7%
- 2029/30: 9%
- Plug-in Hybrid Vehicles (PHEVs):
- Rates continue to be tiered based on electric range and CO₂ emissions.
- Most PHEVs will see BIK rise by 1% per year, in line with EVs.
- Key changes are in 2028/29 when all PHEV will be taxxed at 18% BIK
Full up to date BIK info can be found on our LetsTalkFleet site : Company Car & Van Benefit In Kind
There is additional potential impact for PHEVs with the new Euro 6e-bis rating scheme, full details here : Euro 6e-bis 2025: What It Means for PHEVs and Fleet Owners
Fleet Insight: EVs still offer substantial tax advantages for drivers, especially those in higher income brackets. However, fleets should factor in the gradual cost increase over the next few years.
Vehicle Excise Duty (VED): EVs Lose Their Free Ride
From April 2025, zero-emission cars will no longer be exempt from VED.
- First-year rate for EVs: £10
- Standard rate (from year 2): £195 (same as petrol/diesel cars)
- Expensive Car Supplement: £390/year for cars costing over £40,000 — now applies to EVs too.
Other VED changes include:
- PHEVs (1–50g/km CO₂): £110 first year
- First year VED rates have doubled on all cars emitting over 75g/km
- High-emission cars (over 255g/km): £5,490 first year
Fleet Insight: Although EVs will now incur tax from year two, they remain significantly cheaper to run from a tax perspective. Be wary of the Expensive Car Supplement, especially with premium EV models which add £850 to the RFL cost on a 3 year lease.
Double Cab Pickups: Reclassified as Cars
A major change for many business users — from April 2025, double cab pickups (e.g., Ford Ranger, Toyota Hilux) will be treated as cars, not vans, for tax purposes.
This means:
- BIK will be based on list price and CO₂ emissions (no longer the fixed van rate)
- Capital Allowances: Businesses will only be able to claim 6% writing-down allowance, instead of 100% AIA or full expensing.
Fleet Insight: Pickups will lose their appeal as a tax-efficient choice for company use. Businesses may need to revisit commercial vehicle strategies.
Capital Allowances and Corporation Tax
- Full expensing for qualifying plant and machinery remains in place.
- Corporation tax continues at 25% for businesses with profits over £250,000 with tapering from 19%
Fleet Insight: While full expensing still applies to some vehicles its worth looking out for those qualifying.
Employers National Insurance Increasing
- Increases from 13.8% to 15% from April 2025
- Impacts Employer provided benefits including company car and private fuel
Fleet Insight: Check for impact on salary sacrifice schemes.
Summary for Fleet Managers
| Tax Area | Change in 2025/26 | Fleet Impact |
|---|---|---|
| BIK for EVs | +1% to 3% | Slight increase in driver tax |
| BIK for PHEVs | +1% depending on range & CO₂ | Drivers pay more; review specs closely |
| VED for EVs | Starts at £10, then £195/year | Increases cost of ownership |
| Expensive Car Charge | £390 applies to EVs over £40k | Impacts premium EV models |
| Double Cab Pickups | Treated as cars, not vans | Higher tax bills & lower allowances |
| Employers National Insurance | Up from 13.8% to 15.0% | Higher tax bills |
Final Thoughts
2025/26 brings important changes that will shift the fleet landscape, particularly in how businesses manage costs, select vehicles, and provide company cars. EVs continue to enjoy favourable treatment but with benefits gradually tapering, strategic planning is more important than ever.
Fleets should act now to:
- Maximise capital allowances before pickup rules change
- Re-evaluate EV and PHEV mix for both tax and operational efficiency
- Forecast whole-life costs (TCO) with future tax increases in mind.
LetsTalkFleet can provide independent impartial advice on all aspects of Fleet Policy Development for your business so please get in touch with any specific enquiries you have, we are available on 0330 056 3335 or via email contact@letstalkfleet.co.uk or via Whatsapp.