During April 2025, several significant Commercial Vehicle Tax Changes may have impacted businesses utilising commercial vehicles. It’s crucial to stay informed to ensure compliance and optimise your operations. Here’s an overview of the key changes:
1. Vehicle Excise Duty (VED) Increases
All new vehicles will experience increased VED rates starting from April 2025. The first-year rate, determined by the vehicle’s CO₂ emissions, will see substantial hikes. For instance:
- Vehicles emitting 1-50 g/km CO₂ will see an increase from £10 to £110—a 1000% rise.
- Vehicles emitting over 255 g/km CO₂ will face an increase from £2,745 to £5,490.
These adjustments aim to encourage the adoption of low-emission vehicles.
| Band | CO2 (g/Km) Range | Avg. Road Tax (1st Year) 24/25 | Avg. Road Tax (1st Year) 25/26 | Avg. Difference | Cost % increase |
| A | 0 | £0 | £10 | £10 | 0% |
| B | 1-50 | £10 | £110 | £100 | 1000% |
| C | 51-75 | £30 | £130 | £100 | 333% |
| D | 76-90 | £135 | £270 | £135 | 100% |
| E | 91-100 | £175 | £350 | £175 | 100% |
| F | 101-110 | £195 | £390 | £195 | 100% |
| G | 111-130 | £220 | £440 | £220 | 100% |
| H | 131-150 | £270 | £540 | £270 | 100% |
| I | 151-170 | £680 | £1,360 | £680 | 100% |
| J | 171-190 | £1,095 | £2,190 | £1,095 | 100% |
| K | 191-225 | £1,650 | £3,300 | £1,650 | 100% |
| L | 226-255 | £2,340 | £4,680 | £2,340 | 100% |
| M | 256+ | £2,745 | £5,490 | £2,745 | 100% |
2. Fuel Duty Adjustments
The existing freeze on fuel duty, including a 5p per litre cut, has been extended until March 2026. This extension aims to maintain lower fuel prices for businesses relying on petrol or diesel vehicles.
3. Taxation of Electric Vehicles (EVs)
Significant changes are forthcoming for EV taxation:
- VED Introduction: From April 1, 2025, electric vehicles will no longer be exempt from VED. Newly registered EVs will incur a first-year rate of £10, increasing to £195 annually from the second year.
- Expensive Car Supplement: EVs with a list price exceeding £40,000 will be subject to an additional annual charge of £425 for five years, starting from the second year of registration.
4. Reclassification of Double-Cab Trucks
Certain double-cab trucks, previously classified as commercial vehicles, may be reclassified based on specific criteria such as payload capacity and design features. This reclassification could result in higher VED rates and increased company car tax liabilities. Businesses should review their vehicle classifications to ensure compliance.
5. Advisory Fuel Rates (AFRs) Updates
AFRs, which guide reimbursement rates for employees using company vehicles, will undergo revisions to reflect current fuel prices and vehicle efficiencies. Staying updated with these rates is essential for accurate mileage reimbursements and tax compliance.
6. Congestion Charges for EVs
Several UK cities are revising their congestion charge policies. Notably, some areas plan to remove exemptions for EVs, meaning businesses operating EVs in these zones may incur additional charges. It’s advisable to monitor local policies to anticipate and manage these costs effectively.
Action Steps for Businesses:
- Assess Vehicle Portfolios: Evaluate your current fleet to understand how these tax changes will affect operational costs.
- Consider Vehicle Upgrades: Investing in low-emission or electric vehicles could offer long-term financial benefits, despite the upcoming tax changes.
- Stay Informed: Regularly consult official resources and industry news to keep abreast of tax regulations and ensure compliance.
For personalised advice on how Commercial Vehicle Tax Changes may impact your business, feel free to contact WBV Accountants.
Note: Tax regulations are subject to change. Always consult official sources or a tax professional for the most current information.
Recent Comments