There remain “too many questions” around electric vehicle excise duty (eVED) with 18 months remaining before its introduction, says the Association of Fleet Professionals (AFP).
The government plans to charge 3.0 pence per mile for battery electric cars and 1.5 pence per mile for plug-in hybrids from April 2028, added to the road fund licence and collected by the DVLA. Mileage will be estimated a year in advance and any difference refunded or taken into account for the following year’s taxation estimate. The mechanism for providing such refunds however has not been developed and will not be available until 2030.
Paul Hollick, AFP chair, said: “The Treasury remain adamant the current plans for eVED will go ahead, even though fleets have a long list of issues to which there are no easy solutions.
“The good news is that car operators will be given APIs that allow them to digitally pay monthly, six-monthly or annually, so the actual payment process should be easy. However, the good news largely ends there.”
Problems include the handling of eVED when drivers switch between vehicles, the absence of a refund mechanism, selling an electric car with a mileage payment deficit, and mileage verification requirements.
There are also taxation queries, including whether benefit in kind (BiK) tax would apply where an employer pays eVED on private mileage, and the potential for BiK to be charged on both the private eVED element and any electricity benefit.
Hollick said: “As confirmed in the Budget, plans exist for a connected car mileage reporting platform and an automated refund system, but neither of these will be ready for 2028.
“There will also be a fleet-specific DVLA eVED platform that may solve some of the issues we are highlighting, but again, it won’t be available at launch and it’s unclear how it will work. Our members are worried they may be fined when they are being presented with a situation unworkable in key respects.
“We remain in regular contact with the DVLA and the Treasury but it feels as though, with 18 months to go, there are just too many unanswered questions.”
As well as these detailed concerns, the AFP remains concerned about the impact of eVED on demand for used electric cars, he added.
“We fully recognise the shortfall in tax revenue caused by electrification must be made up at some point, but we are only now entering a moment where the market for used electric cars is starting to function properly. We believe that this tax should be delayed until 2030 to align with the ZEV Mandate requirements and allow for a more sensible period of implementation.
“This has been largely due to consumers recognising EVs are now cheaper to run than equivalent ICE models as fuel costs escalate. Adding a cost – especially a fiddly and complex tax such as this – is clearly likely to deter buyers.”
