The much anticipated 2025 Budget (26 November) has landed, but what does it really mean for fleets? As always, there are some challenges as well as some wins for fleet operators - we’ve unpacked the key points and what they mean for SMEs.
1. Salary sacrifice for electric vehicles remains intact
While the budget introduced caps on salary sacrifice for pensions, EV salary sacrifice was untouched with Benefit in Kind (BiK) rates preserved. This is a very welcome outcome for businesses and provides certainty for the scheme which is highly popular as a tax efficient route to fleet decarbonisation and as an essential recruitment and retention tool.
2. Electric Car Grant boosted and extended
The government has extended the Electric Car Grant until 2030, and provided £1.3 billion in additional funding which will help power salary sacrifice and fleets wishing to electrify. Qualifying cars on the scheme are listed on the Gov.UK site, with cars qualifying for the full grant eligible for a discount of £3,750 - more information on the grant is available here.
However, the automotive industry remains concerned about the lack of support for the used EV market, which is crucial to wider market adoption. Ongoing pressure on residual values runs the risk of higher future lease prices for fleets.
3. Expensive car supplement raised to £50,000 for EVs
From April 2026, the list price threshold at which electric cars are subject to the expensive car supplement will increase from £40,000 to £50,000. The increased threshold applies to zero emission vehicles (ZEVs) and also applies retrospectively, for cars registered from April 1, 2025. This opens up more EV choice to fleet drivers without incurring the additional £425 a year current surcharge.
The lower £40,000 barrier will continue to apply to all petrol, diesel and hybrid models.
4. Benefit-in-Kind clarity for Plug-In Hybrids
Some clarity on the Benefit-in-Kind (BiK) rules for plug-in hybrid vehicles (PHEVs) was provided to reduce the impact of a new, stricter emissions test (the Euro 6e-bis emission standard) for plug-in hybrid electric vehicles (PHEVs) on company car taxation.
A temporary BIK tax easement for impacted PHEVs will apply for cars registered from January 1, 2025 to April 5, 2028. It was confirmed that during the easement period, the CO2 emission figure for affected PHEVs will be applied as a nominal figure of 1g/km for the purposes of the BIK charge. This is in place of the CO2 figure on the registration document.
This should remove an administrative headache for businesses, but hikes in BiK rates should be expected from 2028.
5. A new Electric Vehicle Excise Duty (eVED) is coming
One of the most significant announcements in the Budget was the introduction, subject to consultation, of the eVED - introduced to make up for declining fuel duty revenue.
Which vehicles are affected?
Starting from April 2028, the duty will be applied to both battery electric vehicles and plug-in electric hybrids.
What will eVED cost?
The initial rate is 3p per mile for fully electric cars and 1.5p per mile for plug-in hybrids. The rates apply for the first year and will rise annually with inflation.
For each EV driver covering 10,000 miles a year, this is expected to add around £300 to annual running costs.
How will eVED work?
Whilst a government consultation is currently open on the mechanics of the new scheme, particularly around leased vehicles, it is expected to work as follows:
• Drivers estimate their annual mileage and pay the eVED charge on top of the standard Vehicle Excise Duty (road tax)
• For new cars, mileage will be checked annually
• For vehicles over 3 years old, mileage will be verified at the annual MOT
• Discrepancies in mileage will be adjusted for the following year's payment
‘The Autumn Budget brings a degree of certainty for businesses as they plan their fleet strategies. We’re particularly pleased to see EV salary sacrifice protected as it’s such an important tool for SMEs. Our biggest concern is that the introduction of eVED could create hesitation in the shift to electric - at a time when confidence in the EV market is critical.
At Gofor, our focus is on helping our customers make sense of the latest budgetary changes and continuing to support them with running their fleets as cost effectively as possible.’
Graham Lesslie, CEO, Gofor
6. Investment in charging infrastructure - including business incentives
The budget included support for EV charging infrastructure which could prove particularly helpful to businesses planning to install charge points at their premises to support employees with electric vehicle charging. Measures include:
• An additional £200 million for the roll out of new public charging points
• A 10-year 100% business rates relief for companies installing EV chargepoints
What are the budget impacts for petrol and diesel vehicles?
7. Fuel Duty freeze extended - for now
The current 5p per litre cut on fuel duty on petrol and diesel will remain in place but will be unfrozen for the first time since 2010 from September 2026. There will be a staggered reversal of the 5p cut starting with 1p from September 2026, followed by 2p in December 2026 and then 2p in March 2027. From April 2027 onward, fuel duty will increase annually, in line with the Retail Price Index (RPI) measure of inflation.
For SMEs running petrol or diesel vehicles on fleet, especially high mileage and delivery delivery vehicles, this could equate to significant future cost increases.
8. Writing-down allowance reduction
The main writing-down allowance (WDA) for plant and machinery is being reduced from 18% to 14%, with the special rate remaining at 6%. The new rate will be effective from 1 April 2026 for businesses paying corporation tax and 6 April 2026 for businesses paying income tax. For businesses that purchase vehicles outright, this will have an impact on Profit and Loss accounts
For more budget information:
Gov.uk Consultation on the introduction of eVED
House of Commons: Autumn Budget 2025 Summary
Gov.uk Vehicle tax rate tables
Gov.uk writing down allowance
Want to understand more about the impact of the budget?
At Gofor, we specialise in supporting SME fleets - from vehicle selection to decarbonisation, and full fleet management. Get in touch to find out more about how we can help your business maximise the latest budget changes for your fleet.
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