Cut costs, not quality: Top company cars that dodge premium tax

What are the 2025 VED changes?

Thinking about leasing a car for your business? Time to navigate what the 2025 VED changes mean for your next car lease.

Buckle up – class is in session.

From April 1, 2025:

•  All newly registered electric cars will pay a first-year VED rate of £10
•  From the second year onwards, they’ll pay the standard rate of £195 annually
•  Models priced over £40,000 (including options) will also be subject to the expensive car supplement (or ‘premium car tax’): £425 per year for years two to six

If you do the maths (don’t worry if numbers aren’t your strong suit - we’ve done it for you), EVs costing more than £40k will face an additional £620 per year in road tax from year two, for a total of £1,870 over the first four years.

And that’s not the end of the road.

BiK tax rates for electric models are also increasing by 1% each year from 2025 until 2028, to a total of 5%, though this is still way below what you’d pay in BiK for a petrol or diesel number.

Leasing remains a financially savvy way to drive a brand-new EV, too.

Not only do you benefit from the latest tech and safest cars, but your road tax will be factored into the cost of your lease. However, it’s always worth having a chat with your leasing consultant just to clarify all your costs – they’re always up to speed with the most current information.

If the VED increases again during the term of your lease, your monthly payment might go up. But you’ll be kept informed of any changes before they happen.

Eight EVs under £40k that avoid the expensive car supplement

The good news? There are plenty of electric cars that won’t trigger the expensive car supplement.

Here are eight of our favourite EVs that slip under that magic number – and they’re all available on business lease deals.

Hyundai Kona Electric

Price: Between £32,400 and £39,400

The Hyundai Kona Electric is one of the few sub-£40k electric cars to offer an official range of more than 300 miles, putting it ahead of many of its pricier alternatives.

This competent and practical electric SUV comes with a choice of two batteries: either a 48.3kWh option with a WLTP Comb range of 234 miles, or a larger 65.4kWh with a WLTP Comb range of 319 miles.

Standard features include 17in alloy wheels, dual-zone climate control, keyless entry and a heat pump, and there’s plenty of space for both passengers and luggage.

Our pick?

The long-range version in the entry-level Advance trim offers the best value for money with the most range – and it comfortably slides under the £40k mark.

Kia EV3

Price: Between £33,005 and £39,405

Kia’s most affordable electric SUV comes with an impressive range between charges, a comfortable ride, and plenty of standard kit.

The longest-range Kia EV3 offers a WLTP Comb range of up to 375 miles, while the cabin is more spacious (and dare we say it, more comfortable) than the Jeep Avenger and MINI Aceman. It’s armed with a generous 460L boot, as well as heated front seats and steering wheel, adaptive cruise control, and keyless entry.

All the mod cons you could ever wish for, in one stylish and compact package.

If you need to reliably travel more than 200 miles between charges while keeping costs down, the Long Range GT Line, coming in at £39,405, is worth considering.

MG4 EV

Price: Between £26,995 and £36,495

The MG4 EV remains excellent value for money, despite an influx of rivals over the past few years. It’s cheaper than many petrol or hybrid equivalents, and offers a competitive range, decent charging speed, spacious rear seats, and plenty of equipment.

And it’s available in Volcano Orange, which has become one of our favourite car colours in recent times.

Bright and cheerful, it’s a little reminiscent of Tigger – and the MG4 is really built of wonderful things, much like our stripy hero.

There are three battery options to pick between. You can pick between the entry-level 50.8kWh with its 218-mile range, the middling Long Range version with a 61.7kWh battery and 281-mile range, or the Extended Range variant with its 77kWh battery and 323 mile range (all WLTP Comb).

Each MG4 EV offers generous head and leg room, even for the taller among us, and standard features include adaptive cruise control, rear parking sensors, and a seven-year warranty.

When you consider the MG4’s overall package, it remains a superb all-around option – and at under £30,000 for the entry-level model, it’s a steal.

Renault 5

Price: Between £22,995 and £28,995

The reborn French icon proves you don’t need to spend big to go electric. This brilliant all-rounder takes styling cues from the popular 1970s hatchback, but it’s thoroughly modern under the skin.

And it has a detachable baguette holder – an innovation that is quite possibly the best thing since sliced bread.

Starting at a mere £22,995 (it is a little car, but that’s half of its charm), the Renault 5 has a WLTP Comb range between 193 and 252 miles, depending on which battery you opt for. Sure, it isn’t going to get you from Land’s End to John o’ Groats without a few recharging stops, but it’s an excellent city-based car.

The interior is modern, despite its retro exterior, and the standard equipment includes automatic air con, cruise control, and keyless entry.

If you’re looking for the most bang for your buck, opt for the mid-level Techno trim with the larger Comfort Range battery. It’ll get you where you need to be, without burning a hole in your budget.

Vauxhall Frontera

Price: Between £23,995 and £26,395

The brand-new Vauxhall Frontera’s no-frills approach to life is quite refreshing. On paper, it’s astonishing value for money – especially when compared to its more expensive sibling, the Vauxhall Mokka.

It’s just as good in the steel, too.

The initial version available at launch has a 44kWh for a WLTP Comb range of 186 miles, though a larger-battery version is coming with a claimed range of around 248 miles, which will alleviate most range anxieties.

Inside, it has all the mod cons you’d expect from a 2025 Vauxhall, including the ‘Pure Panel’ cockpit with twin 10-inch displays, wireless Apple CarPlay and Android Auto, wireless smartphone charging, rear parking camera, and a decent 460L boot.

Essentially, the Frontera is a C-segment SUV priced at B-segment SUV levels, giving you more car for your money while staying well below the premium tax threshold.

SKODA Elroq

Price: Between £31,500 and £37,400

The impressive Elroq – ‘electric’ and ‘Karoq’ mashed together – is SKODA’s newest addition to their electric lineup, and the first to show off their latest ‘Modern Solid’ design language.

Starting at a whisker over £31,000 for the entry-level SE trim, the SKODA Elroq offers three battery options with a WLTP Comb range of between 232 and 360 miles, a comfortable ride, and a practical 470L boot.

The interior is built to a high standard, and packed with SKODA’s iconic – and very useful – extra little touches, like a door umbrella for when you get caught short.

The Elroq combines SKODA’s renowned practicality with the best in electric efficiency, while keeping the price below the premium tax threshold.

Perfect, right?

KGM Torres EVX

Price: Between £36,995 and £39,295

If you’re after something a bit more distinctive, the KGM Torres EVX brings striking design and plenty of space at a competitive price point.

It’s the first KGM model to reflect the brand’s new design philosophy – ‘powered by toughness’ -and it’s named after the Torres del Paine National Park in Chile.

One of the larger KGMs you can lease, it offers an awful lot of bang for your buck.

There’s plenty of head and leg room in the front and back, twin 12.3in screens for your drivers display and infotainment, and a cavernous 703L boot with a very practical square shape. If you’re after a company car that doubles as a family wagon, this is a good ‘un.

And despite its unique, rugged styling and generous equipment, the Torres EVX still comes in under the £40k threshold, making it a value-packed option.

Volvo EX30

Price: Between £33,060 and £34,410

The compact-but-premium Volvo EX30 brings Scandinavian minimalism and Volvo’s renowned safety credentials to the small electric SUV segment.

Both the Core and the Plus trim levels come in under £40,000, but the top-spec Ultra will incur the premium car tax – so best to steer clear if you’re looking to save your pennies.

But the Core trim is actually very good, and it’s our pick of the bunch if you’re looking for a financially savvy lease deal.

It boasts a WLTP Comb range of 209 miles for the Single Motor option, or 295 for the Extended Range, but its fast charging capabilities mean you’ll be back on the road in under half an hour. The Google-based infotainment system is one of the best on the market, and the sustainable interior boasts plenty of recycled materials.

The EX30 really packs Volvo’s premium feel and cutting-edge tech into a compact package that looks good on your driveway. We’re big Volvo fans, and the EX30 is no exception.

Getting into gear with a business lease

Did you know that leasing an electric car for your business comes with plenty of perks?

If you opt for a sub-£40k model, you’ll not only avoid the expensive car supplement, but you’ll also:

• Not have to worry about depreciation, or the admin headache of reselling
• Easily be able to budget with fixed monthly payments
• Have the potential to reclaim VAT
• Benefit from the latest tech and safety features with each new lease
• Have the option to include a maintenance package for hassle-free motoring

Whether you’re looking for your first electric car, or you’re upgrading from an older model, opting for an electric lease under £40,000 could save you some serious cash, if that’s important to you.