From April 2025, electric vehicle (EV) owners across the UK—including businesses in Glasgow—will lose their exemption from Vehicle Excise Duty (VED). This means electric vans, company cars, and fleet vehicles will now be taxed the same way as petrol and diesel vehicles.
For small business owners in and around Glasgow—many of whom invested in EVs based on long-term cost savings—this could mean unexpected running costs and tough decisions about future vehicle purchases.
Here’s what’s changing, what it means in practice, and how to plan ahead.
What’s Changing for EVs?
Up until now, fully electric vehicles have been exempt from road tax—one of the headline incentives used to boost adoption.
But from 1 April 2025, all EVs will be taxed under the standard VED rules. The new rates depend on registration dateand list price.
Before-and-After: Electric Vehicle VED
| Vehicle Type | Before April 2025 | From April 2025 |
|---|---|---|
| New EVs (registered from 1 April 2025) | £0 | £10 in year 1, then £195 per year |
| EVs registered 2017–2025 | £0 | £195 per year |
| EVs registered before April 2017 | £0 | £20 per year |
| Expensive EVs (List price over £40,000) | £0 | +£390 per year for 5 years (as with ICE) |
What This Means for Glasgow-Based Businesses
Many business owners in Glasgow made the switch to EVs based on promises of:
- Lower running costs
- Government incentives
- Environmental benefits
- Access to Low Emission Zones (LEZs)
The VED exemption was a key part of that decision. Now, businesses operating electric vans, company cars, or taxis are facing new annual costs—potentially across entire fleets.
Real-World Impact
Even a modest business running:
- 3 EV vans → £585 extra per year
- 6 EV company cars → £1,170 extra per year
That’s on top of insurance, maintenance, and LEZ compliance costs.
While £195 per vehicle might seem small in isolation, it adds up quickly—and eats into the margins that made EVs attractive in the first place.
Why Is the UK Government Doing This?
The government has relied heavily on fuel duty and road tax for public funding. As EV adoption rises, revenue from petrol/diesel cars is falling.
The new VED rules are being framed as a move toward fairness—ensuring that all road users contribute to maintaining the UK’s transport infrastructure.
A Treasury spokesperson explained:
“As electric vehicles become more common, it is only fair that all road users contribute to the upkeep of our infrastructure. This change ensures a sustainable future for the UK’s roads.”
Does This Undermine Net Zero Goals?
That’s the question many are asking—particularly here in Scotland, where the Government has committed to ending the sale of new petrol and diesel cars by 2030.
Organisations like the Energy Saving Trust Scotland continue to promote EV adoption, noting that even with VED applied:
- EVs remain far cheaper to fuel and service
- They support urban air quality and LEZ compliance
- They still benefit from reduced emissions-based tax on company cars
But business owners are understandably confused. While the Scottish Government pushes for cleaner fleets, UK-wide tax changes add cost to going green.
What Environmental Campaigners Are Saying
Groups like Friends of the Earth Scotland acknowledge the disappointment but urge businesses to stay the course:
“While no one likes extra costs, EVs remain a crucial part of Scotland’s climate strategy. Business owners should look at the bigger picture—EVs still offer savings on fuel, servicing, and emissions.”
Should You Stick With Electric Vehicles?
This depends on:
- How many vehicles you operate
- Whether you buy outright or lease
- Your eligibility for salary sacrifice or benefit-in-kind relief
- The routes you drive and whether you’re subject to LEZ restrictions
In many cases, EVs are still the most cost-effective long-term option—especially if you’re driving high mileage in urban areas. But the decision is now more nuanced.
Some Glasgow businesses are already weighing up hybrid or even efficient diesel models for specific use cases.
Planning Ahead
Here’s what I recommend for business clients in Glasgow:
- Review your fleet mix – Consider whether each vehicle is delivering a return based on its full cost of ownership
- Budget for VED – Factor in £195–£585 per year per vehicle (plus £390 supplement if over £40k)
- Use tax reliefs properly – You may still save through capital allowances, mileage rates, or company car tax planning
- Don’t act on assumptions – Let’s run real numbers before making changes
Final Thoughts
The end of VED exemptions won’t kill the EV market—but it will reshape it. For Glasgow businesses, the key is to balance financial reality with regulatory direction.
If you’re unsure whether EVs still make sense for your business—or want help modelling the costs—I can walk you through it.
👉 Contact Glasgow Accountants – Practical advice for business owners who want clarity on tax, transport, and future-proofing their operations.