Earlier this month, we published several blog posts to share information regarding the tax changes set to take effect in April 2025. These changes include updates to Vehicle Excise Duty, the Expensive Vehicle Supplement, new Benefit-in-Kind rates, a reclassification of Double Cab pickups, and an increase in Employer's National Insurance Contributions.
To learn more about the forthcoming car and van tax changes, as well as how these changes will affect businesses and employees participating in an electric vehicle salary sacrifice scheme, read our blog posts:
Upcoming Car Tax Changes 2025/2026 Tax Year
Upcoming Tax Changes for Vans 2025
Upcoming Financial Changes and EV Salary Sacrifice
This post provide examples to illustrate how the upcoming changes may impact your finances, your business or your employees. To navigate these complexities, Lease Electric recommends consulting your financial advisor or accountant.
Upcoming Car Tax Changes:
Through out these comparisons, we have chosen the Volkswagen ID.4 Match 77kWh Pro,one of Lease Electric's Customer top 10 cars for 2024 and SMMT top selling EVs for 2024. In addition to other Volkswagens of comparable size and P11D Values, we have also included the Volkswagen Touareg Black Edition to illustrate how higher-value diesel vehicles that produce a high amount of Co2 emissions will be impacted.
Vehicle breakdowns:
| EV | Petrol Plug in Hybrid | Petrol | Diesel |
Diesel | |
|
|
Volkswagen Tiguan Match 1.5 TSI eHybrid 204PS 6-Speed DSG 5 Door |
Volkswagen Tiguan Allspace Elegance 1.5 TSI 150PS 7-Speed DSG 5 Door | Volkswagen Tiguan Allspace Elegance 2.0 TDI 150PS 7-Speed DSG 5 Door | Volkswagen Touareg Black Edition 3.0 TDI 286PS 8-Speed Tiptronic 4Motion 5 Door | |
| CO2 emissions (g/km) | 0g/km | 9g/km | 166g/km | 160g/km | 215g/km |
| Electric Range (WLTP) | 346miles | 76miles | N/A | N/A | N/A |
| P11D | £44,335 | £42,645 | £41,325 | £43,870 | £71,170 |
Vehicle Excise Duty
Vehicle Excise Duty (VED), also known as Road Tax, is determined by the CO2 emissions (g/km) of the vehicle. In the Autumn Budget the UK Government confirmed the VED First Year Rates for new cars registered on or after 1 April 2025. From the second year of registration onwards, zero-emission cars will move to the standard annual rate of £195 a year.
Comparison
| Car |
01 April 2025 Year one (First Year Rates) |
01 April 2026 Year two (Second Year Rates) |
| VW ID.4 210kW Match Pro 77kWh 5dr Auto | £10 | £195 |
| VW Tiguan Match 1.5 TSI eHybrid | £110 | £195 |
| VW Tiguan Allspace Elegance 1.5 TSI | £1,360 | £195 |
| VW Tiguan Allspace Elegance 2.0 TDI | £1,360 | £195 |
| VW Touareg Black Edition 3.0 TDI | £3,300 | £195 |
Expensive Car Supplement
Under the Expensive Car Supplement, any car that costs more than £40,000 when purchased new incurs an additional annual fee , sometimes referred to as the 'Luxury Car Tax'.
The £40,000 figure applies to the car's brand-new list price, including any options specced from the original manufacturer. That means a car with a list price of £38,000 with £3,000 worth of options will pay the expensive car supplement, while a car with a list price of £39,999 and no options will not have to pay the supplement.
Whilst EVs have previously been exempt from this tax, from 1 April 2025, any new EVs priced over £40,000 will be subject to this tax.
Each of the cars we have chosen for this comparison will incur the annual Expensive Car Supplement, if registered on, or after 01 April 2025. This £410 tax would be paid annually, for the first 5 years.
Should the Volkswagen ID.4 210kW Match Pro 77kWh be registered before 01 April 2025, this vehicle will be exempt from this tax.
Benefit-in-Kind Rates (Company Car Tax)
To calculate the BIK, use the following formula:
P11D X BIK percentage = Taxable benefit x Tax Rate = Tax for the entire tax year / 12 = your monthly expense.
Comparison
| EV | Petrol Plug in Hybrid | Petrol | Diesel |
Diesel | |
|
|
VW Tiguan Match 1.5 TSI eHybrid |
VW Tiguan Allspace Elegance | VW Tiguan Allspace Elegance 2.0 |
VW Touareg Black Edition | |
| P11D Value | £44,335 | £42,645 | £41,325 | £43,870 | £71,170 |
| CO2 Emissions (g/km) | 0 | 9 | 166 | 160 | 215 |
| EV Range | N/A (349miles WLTP) | 76 Miles | N/A (0 Miles) | N/A (0 Miles) | N/A (0 Miles) |
| 2025 / 2026 |
|||||
| 20% Tax Payer (Monthly) | £22.17 | £42.65 | £254.84 | £270.53 | £438.88 |
| 40% Tax Payer (Monthly)Monthly | £44.34 | £85.29 | £509.68 | £541.06 | £877.76 |
| 2029 / 2030 |
|||||
| 20% Tax Payer (Monthly)Monthly | £66.50 | £135.04 | £268.61 | £285.16 | £462.61 |
| 40% Tax Payer (Monthly)Monthly | £133.01 | £270.09 | £537.23 |
£570.31 |
£925.21 |
For a complete breakdown of BiK rates by year, refer to our BiK rate table.
Useful Links
Upcoming Automotive Regulation Changes 2025-2030
HMRC Guidance - Vehicle tax for electric, zero or low emission vehicles