01.07.2025
Fleet EV Savings in the UK (2025) : A Whole-Life Cost Playbook for Fleet Managers
A practical, CFO-ready method to model EV whole-life cost (WLC) in the UK. Updated for 2025 policy: HMRC AER 7p, new EV VED from April 2025, EV BiK 3→5%, Class 1A NIC 15%, VAT 5% (home) vs 20% (public). Includes example tables and a calculator CTA.
Fleet EV Savings in the UK (2025): A Whole-Life Cost Playbook for Fleet Managers
Who this is for: UK fleet managers, CFOs and procurement leads who need a fast, defensible way to compare diesel vs BEV on whole-life cost (WLC), not just fuel.
TL;DR (speakable):In 2025, EVs keep a structural WLC edge for company cars when most charging is at home/depot—thanks to AER 7p/mile, EV BiK 3→5%, and home electricity VAT 5%. The edge narrows (or flips) if drivers rely heavily on rapid public charging (typically ~76p/kWh). Deploying home/depot charging + a clear mileage policy usually locks in savings. (GOV.UK, Zapmap)
What changed in 2025?
- HMRC AER (EV) = 7p/mile, in force since 1 June 2025. AFR for petrol/diesel also updated (see tables on the HMRC page). (GOV.UK)
- EV BiK rose to 3% in 2025/26, then 4% (2026/27), 5% (2027/28); government confirmed +2 points per year in 2028/29 and 2029/30 (→ 9% in 2029/30). (BMW UK, GOV.UK)
- EV VED applies from 1 April 2025: £10 first year, then £195; Expensive Car Supplement (£425/yr, years 2–6) now also applies to EVs with list price > £40k. (GOV.UK)
- Employer Class 1A NIC on benefits is 15% for 2025/26. (GOV.UK)
- VAT: 5% on domestic electricity; public EV charging is standard-rated (20%) under VAT Notice 701/19. (GOV.UK)
- Public charging prices (reference): weighted average ~51p/kWh (slow/fast), ~76p/kWh (rapid/ultra-rapid)mid-2025; rapid networks range ~52–88p/kWh. (Zapmap)
- ZEV Mandate 2025: nominal targets 28% cars / 16% vans (with added OEM flex in 2025–26). (DriveElectric, GOV.UK)
- London context: ULEZ £12.50/day; Congestion Charge consultation proposes £18 from 2 Jan 2026 (not yet in force). (Transport for London)
Recommendation (policy housekeeping). Add a review cadence for: AER/AFR (Mar/Jun/Sep/Dec), BiK (annual), VED (April), VAT guidance changes, TfL charges. Tie this to your fleet policy and the Methodology page.
The WLC method
Definitions
- TCO vs WLC: WLC = TCO + tax & policy effects (BiK, Class 1A NIC, VED, ULEZ/C-Charge exposure, charging VAT mix).
- P11D value (for BiK): list price incl. VAT + delivery; excludes first-year VED & registration. (GOV.UK)
Worked example — Diesel vs BEV (36 months, 12k mi/year)
Note: This is illustrative; plug your own models into the calculator for exacts. Fuel prices and P11D differ by model and grade.
1) Energy cost (mileage × cost-per-mile)
Diesel (reference): HMRC diesel AFR band gives ~13p/mile → £4,680 over 36k miles. (GOV.UK)
BEV scenarios (efficiency 0.28 kWh/mi):
- Home-only (AER basis): 0.28×25.64p = 7.18p/mi → £2,585 / 36k (saving vs diesel ≈ £2,095) . (GOV.UK)
- 80% home / 20% public slow/fast (~51p): 8.60p/mi → £3,096 / 36k (saving ≈ £1,584). (Zapmap)
- 50% home / 50% rapid (~76p): 14.23p/mi → £5,123 / 36k (≈ £443 more than diesel). (Zapmap)
Recommendation. Your charging strategy (home/depot > public rapid) materially determines WLC. Prioritise home/depot coverage and reimbursement rules before mass rollout.
2) Company-car taxes & employer NIC (BEV)
- BiK on P11D £34,000 with rates 3% → 4% → 5% = £1,020 + £1,360 + £1,700 = £4,080 total taxable benefit over 3 years. Driver pays £816 (20% band) or £1,632 (40% band) across 3 years. (BMW UK)
- Employer Class 1A NIC = 15% × BiK = £612 total over 3 years. (GOV.UK)
- VED (EV) = £10 (Y1) + £195 (Y2) + £195 (Y3) = £400. If list price > £40k, add £425/yr (Y2–Y6). (GOV.UK)
Fact. Home electricity is VAT-rated at 5%; public charging is 20%. This is why policy-grade costings must track where energy is bought. (GOV.UK)
3) WLC snapshot (illustrative)
| Component (36 months) | Diesel (ref) | BEV (Home-only) | BEV (80/20 S/F) | BEV (50/50 Rapid) |
|---|---|---|---|---|
| Energy/fuel | £4,680 | £2,585 | £3,096 | £5,123 |
| Employer Class 1A on BiK (EV only) | — | £612 | £612 | £612 |
| Driver BiK @20% (visibility only) | — | £816 | £816 | £816 |
| EV VED | — | £400 | £400 | £400 |
| Subtotal (employer cash items) | — | £3,597 | £4,108 | £6,135 |
Acquisition (lease/depreciation), insurance and SMR must be added per model/contract; the Fleet-savings calculator does this with your inputs. Internal link: “Calculate your fleet savings (UK)” → fleet-savings.evdatacompare.com.
Policy quick wins
- Mileage policy: Reimburse EV business miles at AER 7p/mile; add a documented uplift (e.g., +3–5p) only when drivers must use public charging without home access (justify via VAT 20% vs 5%). (GOV.UK, rsmuk.com)
- Charging mix: Prioritise home/depot charging (WCS grant can fund sockets: £350/socket, up to 40 sockets; 75%of cost). (find-government-grants.service.gov.uk)
- Company-car line-up: Favour BEVs with P11D ≤ £40k to avoid the Expensive Car Supplement where possible. (GOV.UK)
- London exposure: If operating in central London, price in £15 Congestion Charge today and track the £18proposal for 2 Jan 2026; ULEZ remains £12.50/day for non-compliant ICE. (Transport for London)
- ZEV mandate awareness: Expect OEM pricing/availability to fluctuate vs targets/flex; secure allocations early for fleet specs. (DriveElectric)
FAQs - a short one ; )
Q - What’s the fastest way to compare diesel vs EV for my fleet?
A - Use WLC—not just fuel. Combine acquisition (lease/depreciation), energy (by charging mix), EV BiK, employer Class 1A, VED and any city charges. Our Methodology (UK) explains the steps; then run your numbers in the Fleet-savingstool (CTA below).
Q - What P11D number should I use for BiK?
A - Manufacturer list price incl. VAT + delivery, excluding first-year VED/registration; include factory options. (GOV.UK)
Q - What if drivers can’t charge at home?
A - Document an AER baseline and a “public-charging uplift” (policy note), and accelerate depot rollout with WCS funding. (GOV.UK, find-government-grants.service.gov.uk)
Q - Are EVs still cheaper per mile?
A - Usually—when most charging is home/depot. Heavy rapid-charging usage can erase the per-mile advantage at current public tariffs. (Zapmap)
Calls-to-action & internal links
- Calculate your Fleet Savings (UK) → fleet-savings.evdatacompare.com
- Our UK Methodology (HMRC/TfL-aligned) →fleet-savings-uk-methodology
- Best electric car 2025 (fleet short-list) → best-electric-car-2025-comparative
- Range anxiety: why it’s history → range-anxiety-a-thing-of-the-past-with-modern-electric-vehicles
Compliance notes & sources
- HMRC AER/AFR tables (from 1 June 2025) and calculation basis. (GOV.UK)
- EV BiK trajectory (OEM summary) + HMRC policy paper for 2028–2030. (BMW UK, GOV.UK)
- EV VED from 1 April 2025; Expensive Car Supplement now applies to EVs > £40k. (GOV.UK)
- Employer Class 1A NIC = 15% (2025/26). (GOV.UK)
- VAT treatment: 5% domestic electricity; public charging standard-rated (20%) per VAT Notice 701/19. (GOV.UK)
- Public charging price references mid-2025. (Zapmap)
- WCS grant (£350/socket, up to 40, 75% of cost). (find-government-grants.service.gov.uk)
- ZEV Mandate nominal 2025 targets and flex updates. (DriveElectric, GOV.UK)
- TfL: ULEZ £12.50; Congestion Charge proposal to £18 from 2 Jan 2026. (Transport for London)
