Complete guide to UK fleet incentives for low CO2 and electric vehicles 2025

• Low emission vans (up to 50g/km CO2) with at least 60 miles of electric range are eligible for up to 35% towards the purchase price. The Plug-in Van Grant is capped at £2,500 for small (<2,500kg gvw)="" vans="" and="" £5,000="" for="" larger="" vehicles="" (2,500–4,250kg="" gvw)=""></2,500kg>
• Home charging points are supported by up to a 75% grant (capped at £350) but only if they’re installed in flats, rented accommodation or properties without off-street parking. On-street installations also don’t reserve the adjacent space [2, 3].
• Workplace charging points are eligible for 75% towards the unit and installation, capped at £350, on a per-socket basis. Applicants can claim for up to 40 sockets in multiple rounds, and units that can charge two cars qualify for two grants [4].

• Leased low-emission cars qualify for 100% tax relief if they emit 50g/km CO2 or less, which means businesses can deduct the full rental cost from their gross profits and reduce their tax bill. This is capped at 85% for cars with higher emissions [5].
• Purchased electric cars are eligible for a 100% first-year allowance, which means the full cost can be deducted from pre-tax profits. This is reduced to 18% for vehicles between 1–50g/km CO2, and 6% for other cars [6].
• Commercial vehicles are covered by the annual investment allowance (AIA), which enables up to £1m of assets to be written off against pre-tax profits regardless of CO2 emissions [7]. That excludes double-cab pickups, which are treated as passenger cars for corporation tax purposes – incentivising the handful of low-CO2 models [8].

• Company cars are taxed based on a CO2-weighted percentage of their list price, which disincentives high-emitters. Ultra-low bands for cars up to 50g/km offer a sizeable reduction in driver Benefit-in-Kind and National Insurance Contributions (NICs) for the employer [9].
• Salary sacrifice schemes, where employees give up some of their pre-tax income to fund a leased car, also encourage low-CO2 choices. Vehicles emitting up to 75g/km are taxed as company cars, at ultra-low rates, instead of the typically higher cost of the monthly rentals [10].
• EV charging is also eligible for Benefit-in-Kind exemptions. Employers can install home chargers and provide free charging at work without any tax implications, even if they’re used for private journeys. The latter is available for staff who are carpooling with non-employees [11, 12].

• First-year rates, which are part of the on-the-road price, are discounted for low-emission cars until 2030. There’s a £10 rate for EVs, and two rates for PHEVs – £110 (<51g m)="" or="" £130=""><!--51g--><76g m).="" that’s="" half="" the="" cost="" of="" the="" next="" cheapest="" band=""><!--76g--></76g></51g>
• Standard rates are paid annually, and these are the same for all cars registered since April 2017 – currently £195, plus £425 for the first five renewals if they have a list price of £40,000 or more. The £425 supplement only applies to EVs registered on or after 1 April 2025.
• Electric vans are no longer VED exempt. Most light commercial vehicles cost £345 per year to tax, regardless of their CO2 emissions. That includes double-cab pickups, despite them being treated as cars for corporation tax and Benefit-in-Kind purposes.

Ayvens’ 2025 Fleet Funding and Taxation Guide offers detailed, user-friendly analysis and insights about the UK’s fast-changing financial landscape. Compiled by our Consultancy Services team with experts at Deloitte, it’s a comprehensive analysis of the different options available for cars and vans, with rich insights into the resulting tax and cost implications, including:

• Funding options such as lease or outright purchase, and the tax relief available.
• Company car tax and the incoming changes for plug-in hybrids and pickups.
• Salary sacrifice schemes and how these can benefit employers and employees.
• Vehicle Excise Duty and how the ‘Expensive Car Supplement’ affects EVs.
• Grants and incentives for low-CO2 cars and vans.

[1] https://www.find-government-grants.service.gov.uk/grants/plug-in-van-and-truck-grant-1#eligibility

[2] https://www.gov.uk/electric-vehicle-chargepoint-grant-household/eligibility

[3] https://find-government-grants.service.gov.uk/grants/electric-vehicle-chargepoint-grant-for-households-with-on-street-parking-1

[4] https://www.find-government-grants.service.gov.uk/grants/workplace-charging-scheme-2#summary

[5] https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim47740

[6] https://www.gov.uk/capital-allowances/business-cars

[7] https://www.gov.uk/hmrc-internal-manuals/capital-allowances-manual/ca23084

[8] https://www.gov.uk/government/publications/autumn-budget-2024/autumn-budget-2024-html

[9] https://www.gov.uk/government/publications/autumn-budget-2024-overview-of-tax-legislation-and-rates-ootlar/annex-a-rates-and-allowances

[10] https://www.gov.uk/government/publications/optional-remuneration-arrangements/optional-remuneration-arrangements

[11] https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim23900

[12] https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim01035

[13] https://assets.publishing.service.gov.uk/media/67d1b940a6d78876a3fb0a67/v149-rates-of-vehicle-tax-for-cars-motorcycles-light-goods-vehicles-and-private-light-goods-vehicles-april-2025.pdf