Electric & Hybrid Fleet Vehicles: Licence, Tax & Service Considerations for UK Businesses

Greenhous Fleet Services are proud to work with a range of brand manufacturers who all operate within the electric and hybrid automotive spaces. Businesses looking to transition to low-emission cars for their fleet have more reason than ever to do so. In the UK, businesses that transition to electric (EV) and hybrid fleets can benefit from lower Benefit-in-Kind tax rates, making it even more appealing to make the shift. Read below to find out more about what advantages your business could benefit from when considering the move to a hybrid or electric fleet.

Benefit in Kind (BiK) Advantages

Currently, the BiK tax band for 0g/km CO2 emission electric cars is 4% in the 2026/27 tax year. This is compared to the average petrol car emission tax band, which is upwards of 30%. Whilst this company car tax for EVs has raised from 3% for the 2025/26 tax year, electric fleet vehicle owners will still benefit from drastically lower taxation and helping to reduce overall costs for fleet car users.

For Hybrid models, conventional hybrid models that cannot be charged generally cannot travel far on electric power alone and often emit more than 50g/km of CO2. This means conventional hybrids are often in the same bracket as petrol or diesel cars. However, plug-in hybrids (PHEVs) often emit less CO2 than conventional hybrids and depending on their electric-only range are afforded a BiK tax of 16% or less in the 2026/27 tax year. For businesses who aren’t ready to transition to 100% electric fleet operations, PHEVs may be the way forward to reduce taxation but retain the security of a petrol or diesel engine.   

Please note, different rates apply and advantages differ if you are operating a fleet with company vans.

Vehicle Excise Duty (VED) Advantages

For those interested in the road tax incentives for transitioning to an electric fleet, EVs with zero-emissions are currently offered the lowest first-year rate of just £10, before raising in their second year to the standard rate of £200 per annum. This makes the initial outgoing cost cheaper upon acquiring an electric fleet vehicle.

Enhanced Capital Allowance Advantages

Your business can claim ‘Enhanced Capital Allowances’ on electric cars, and cars with zero CO2 emissions purchased before April 2027. Enhanced Capital Allowances is a type of 100% first-year allowance to deduct the full cost of a business expense from your profits before tax. As a first-year allowance, this means that the cost can only be deducted from the taxable profits made in the same year that the electric vehicle was purchase.

This offers an advantage for businesses when purchasing electric fleet vehicles, as it provides an immediate reduction to their taxable profits, lowering the amount of tax due that same year.

Other Tax Advantages

It is possible to reclaim 100% VAT on fully electric company cars. However, this is only possible if the vehicle is purchased outright and there is no private use to the vehicle. This includes commuting and generally dictates that the car must be kept at the principal place of business and not an employee’s home. Where a vehicle is leased, 50% VAT is recoverable on all-electric models. VAT can also be recovered on any electricity used for business charging at work or in public. However, home charging does not warrant VAT recovery as the supply is to the employee rather than the employer.  

Other Things to Note for Electric and Hybrid Fleet Owners

Advisory Electricity Rates – it is advised by HMRC that charging is costed at 7p/mile for home charging and 15p/mile for public charging.

Driver Training – whilst standard UK driving licenses permit the driving of electric or hybrid vehicles, companies should ensure driver training on EV-specific features like regenerative braking and charging.

Expensive Car Supplement – electric vehicles costing over £50,000 currently incur an additional fee per annum for a period of 5 years, from the second year of registration. This threshold has increased from £40,000 in April 2026 for zero emission cars.

Range Management – it is best practice for fleets to assess the daily mileage of their vehicles to ensure they meet their operational needs.

Mileage-Based Road Tax – from April 2028 eVED will be implemented at 3p per mile for full EVs, around half of the 6p per mile for fuel duty paid by petrol or diesel drivers.

Electric and Hybrid Options at Greenhous Fleet Services

At Greenhous Fleet Services, we work with several manufacturer partners who all operate within the electric and hybrid automotive spaces. We currently offer hybrid and electric vehicles across all our fleet partner brands: BYD, Chery, Citroën, FIAT Professional, Ford, Geely, Leapmotor, MG, Nissan, OMODA JAECOO, Peugeot Commercials and Vauxhall. As such, Greenhous Fleet aim to be a leading and knowledgeable partner in the ongoing electric and hybrid fleet discussions, offering our clients help and support to navigate their transition.  

If you’re looking to electrify your business’ fleet of vehicles, please get in touch with one of our Fleet Services team today, who will be happy to discuss any options with you.

Disclaimer: The information in this article is provided for general guidance only and is based on UK legislation and HMRC guidance at the time of publication. Tax rules, rates and incentives may change and will vary depending on individual circumstances. This content does not constitute financial or tax advice. Businesses should seek independent professional advice before making decisions based on this information.