Fleet Industry Urges Rachel Reeves to Delay Pay-Per-Mile EV Tax Until 2030
The Labour Party government, led by Chancellor Rachel Reeves, is facing mounting pressure to postpone the planned introduction of pay-per-mile car taxes until 2030. This call comes from the Association of Fleet Professionals (AFP), which warns that the current timeline could severely disrupt the electric vehicle market and impose undue burdens on fleet operators.
Concerns Over Electric Vehicle Market Stability
In a formal consultation response, the AFP highlighted fears that implementing the tax in 2028, as scheduled, could negatively impact the uptake of electric vehicles. Paul Hollick, chair of the AFP, emphasised that the electric car market is still stabilising, with fleets grappling with residual value issues, Zero Emission Vehicle mandate volumes, and persistent charging difficulties.
Hollick stated: "We strongly believe the Government should look at ways of delaying and simplifying this proposal while reducing the burden on fleet operators. The electric car market is still stabilising and fleets remain negatively affected by residual value issues, Zero Emission Vehicle mandate volumes and charging difficulties."
Proposed Tax Details and Industry Recommendations
The new tax, known as Electric Vehicle Excise Duty (eVED), was announced in the Autumn Budget and is set to take effect from April 2028. Under this scheme, zero-emission cars will incur a charge of 3 pence per mile in addition to existing road taxes, while plug-in hybrid electric vehicles (PHEVs) will face a rate of 1.5 pence per mile. Both rates are planned to increase annually in line with the Consumer Price Index (CPI).
The AFP argues that delaying the implementation to 2030 would better align with typical fleet cycles, thereby avoiding destabilisation of both new and used vehicle markets. Hollick pointed out that simpler and more effective solutions are available, rather than relying on presumptive mileage rates.
Balancing Taxation Needs with Practical Realities
Hollick acknowledged the government's need to address a taxation shortfall resulting from electrification, as well as the preference for a usage-based system over the current flat-rate Benefit-in-Kind (BiK) tax. However, he criticised the current proposals as "needlessly convoluted," urging a more streamlined approach.
He concluded: "We very much recognise that electrification is leading to a taxation shortfall for the Treasury that needs to be recovered somehow and also the Government would prefer to introduce a system based on use, rather than the flat rate of current BiK. However, the proposals seem needlessly convoluted and this is very much the theme of our consultation response."
This development underscores the ongoing tension between environmental policy goals and economic practicality in the transition to electric vehicles, with industry stakeholders advocating for a more gradual and considered implementation of new taxation measures.
