For many landlords, developers, and property professionals, cars aren’t luxuries - they’re essential business tools. Whether you’re travelling between refurb sites, meeting investors, or managing lets across the country, your vehicle plays a direct role in running your business efficiently.
The 2025 Autumn Budget introduced a number of important motoring tax updates that could impact how much you pay to stay on the road. Here’s a clear breakdown of what’s changing - and how to plan ahead.
1. Pay-Per-Mile Road Tax for Electric and Hybrid Vehicles ⚡
From April 2028, the government will roll out a brand-new “pay-per-mile” road tax system for electric and plug-in hybrid vehicles.
Until now, electric vehicles (EVs) were exempt from Vehicle Excise Duty (VED), but that’s changing. Under the new system:
Fully electric vehicles will pay 3 pence per mile
Plug-in hybrids (under 50g/km CO₂) will pay 1.5 pence per mile
This will be on top of the standard annual VED - currently £195. That means an EV covering 10,000 miles could face a total bill of around £495 per year once the scheme begins.
The government has confirmed that no vehicle trackers will be required. Instead, mileage is likely to be verified through MOT records.
Why this matters for landlords
If you use an EV for property management or site visits, this could increase your annual running costs by several hundred pounds. While EVs still benefit from lower fuel and maintenance expenses, their tax advantage is shrinking.
Those considering a switch to electric before 2028 should factor this in when calculating long-term ownership costs.
2. Expensive Car Supplement (ECS) Threshold Raised 💷
The Budget also increased the Expensive Car Supplement threshold for electric vehicles, providing some relief to EV owners.
From 5 April 2025, the ECS threshold will rise from £40,000 to £50,000 - but it applies only to fully electric cars.
At present, cars over the threshold pay an extra £425 per year for five years, starting in the second year of registration.
What this means for you
If you’ve recently purchased or plan to buy a high-spec electric vehicle for business use, this adjustment could save you over £2,000 across five years.
However, be cautious when choosing your spec. The “list price” used to calculate ECS includes VAT and optional extras - things like premium interiors, alloy upgrades, or even a sunroof can easily push a car over the £50,000 line.
In short: double-check your configuration before signing the order form.
3. Hybrid Emissions and the BiK Easement 🔋
From 1 January 2025, new EU and UN emissions testing standards will increase the reported CO₂ figures for many plug-in hybrids.
That matters because company car tax (Benefit in Kind, or BiK) is based on these figures. In many cases, previously low-emission hybrids could now show more than double the emissions - for example, jumping from 45g/km to 122g/km, and from a 15% BiK band to 30%.
The easement period
To cushion the blow, the government is introducing an easement period that runs until 5 April 2028. During this time, the lower BiK percentages can continue to be used, giving businesses and employees time to adapt their vehicle choices.
If your property business provides company cars, or you’re using one personally through your limited company, it’s a good time to review your leasing agreements before the easement ends.
4. Fuel Duty Frozen Until September 2026 ⛽
Many expected the Chancellor to reverse the 5p cut to fuel duty introduced in 2022, but the freeze has been extended until September 2026.
After that, the government plans gradual increases:
+1p in September 2026
+2p in December 2026
+2p from March 2027
The AA estimates the continued freeze will save drivers roughly £3.30 per tank in the meantime.
What this means in practice
For landlords running petrol or diesel vehicles, the freeze offers short-term relief — but prices will rise again within 18 months. Now’s the time to review fuel efficiency, plan routes more carefully, and explore hybrid or electric options if they suit your business model.
5. Motability Scheme Adjustments ♿
From July 2026, several significant changes will come into effect for the Motability scheme:
VAT relief on advance top-up payments will be removed for higher-value vehicles.
Relief will remain in place for weekly lease costs and vehicle resales.
Premium brands like BMW, Audi, Lexus and Mercedes-Benz are being removed from the scheme.
Overseas breakdown cover will end, and mileage limits will be reduced.
Motability Operations estimates these adjustments will raise the average advance payment by about £400 per vehicle.
The policy aims to prioritise British-made vehicles, targeting a 50% domestic fleet by 2035.
How These Changes Affect Property Businesses 📊
For property professionals, these changes have real-world consequences. Vehicles are a core part of day-to-day operations — whether that’s transporting tools, inspecting sites, or meeting clients.
1. Review fleet and mileage costs
Start forecasting now for 2028 onwards. The pay-per-mile system will make high-mileage users pay more, which may hit landlords with multiple properties or agents covering wide areas.
2. Re-evaluate vehicle ownership structures
If you own vehicles through a limited company, consider how the Hybrid BiK easement could affect director or employee tax liabilities in future.
3. Choose EVs strategically
If purchasing new electric vehicles, keep the £50,000 threshold in mind to avoid unnecessary ECS costs.
4. Plan ahead for future duty rises
Fuel duty may be frozen now, but gradual increases are coming. Building these into your cost forecasts will help you stay prepared.
The Bigger Picture: Fairer Tax, or Higher Costs? 🔮
The government’s approach reflects a wider shift in how road use is taxed. As fuel duty revenues decline with the rise of electric cars, the Treasury is seeking a sustainable, usage-based alternative.
In reality, that means road tax for all - even for those who went green early.
While many of these measures aim for fairness between EV and petrol drivers, the result is that few motorists will be immune from rising costs over the next five years.
For landlords and developers, these costs can’t simply be written off as personal expenses. Each vehicle - and each mile driven - could soon have a measurable tax impact on your property business’s bottom line.
Key Takeaways for Property Professionals 💡
Pay-per-mile road tax for EVs and plug-in hybrids begins April 2028.
ECS threshold for electric cars rises to £50,000 from April 2025.
Hybrid BiK easement runs until April 2028, offering temporary relief.
Fuel duty freeze continues until September 2026.
Motability scheme tightened from July 2026, increasing average costs.
👀 ⬇️ 👀
If you’re unsure how these changes affect your vehicle allowances, business structure or overall tax position, it’s worth getting professional guidance now — well before 2028.
Contact Us Today
📧 info@propertytaxadvice.co.uk
🌐 www.propertytaxadvice.co.uk
☎️ +44 1249 816810
Frequently Asked Questions
When does the pay-per-mile road tax start?
It’s due to begin in April 2028, charging 3p per mile for electric vehicles and 1.5p per mile for plug-in hybrids, on top of the standard £195 annual VED.
What is the new Expensive Car Supplement threshold?
From 5 April 2025, the ECS threshold for fully electric vehicles increases from £40,000 to £50,000, reducing the number of EVs that pay the £425 annual supplement.
What’s the Hybrid Emissions easement?
The easement runs until 5 April 2028, allowing businesses to keep using lower BiK rates for affected plug-in hybrids while adjusting to the new emissions standards.
How long will the fuel duty freeze last?
Until September 2026, after which gradual increases are planned through to 2027.
What’s changing with the Motability scheme?
From July 2026, VAT relief on advance payments ends for higher-value cars, luxury brands are removed, and mileage limits are reduced.
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