Any increases to Benefit-in-Kind taxation for electric cars must be “fair and equitable” to avoid pushing drivers back into private petrol or diesel alternatives.  

The AFP’s fear is that the Government believes the electric car market is now capable of standing with little support

The Association of Fleet Professionals (AFP) said that following the loss of the Plug-in Car Grant, its fear is that the Government believes the electric car market is now capable of standing with little support.  

And it’s worried that we will see a sudden jump in BiK taxation over a short period of time if the Government believes the sector has reached a point where it can operate with fewer or even no measures to speed and support adoption.  

Paul Hollick, AFP chair, explained: “Fleets have been at the forefront of the electric car revolution and a key factor behind this has been the low Benefit-in-Kind (BiK) taxation on offer to drivers, a fraction of that charged to petrol and diesel company car users. It’s been a highly successful incentive. 

“However, we remain in a situation – which we have been highlighting for some time now – where BiK tables have only been published up until 2024/25, leaving businesses and employees with no indication of what the rate will be for 2025/26 and beyond.”  

Hollick said the temptation to suddenly put BiK up might be strong, “especially at a point in time when the public finances are not in the best shape”.   

He added: “It’s potentially worrying.”  

The AFP’s view is that taxation on electric cars needs to rise but it should be implemented in a manner that’s gradual and well-signposted.  

“In our opinion, increasing BiK rates too quickly would potentially affect rates of adoption by fleets and even potentially push people back out of electric company cars into private petrol or diesel alternatives. There needs to be a fair and equitable approach over time.”  

Hollick also pointed out that the situation is complicated by the fact that EV supply is currently so bad that a company driver asking his employer to order a vehicle today may well have to wait over a year for delivery.   

“That places them in the 2023/24 tax year when BiK will be 2%. Assuming their car is on a four-year cycle, they know that rate will be held until 2024/25 but they will be driving it until 2027/28; a period for which we have no information whatsoever.”  

Hollick continued: “Our view is very much that it would be deeply unfair for that employee to suddenly find dramatic jumps in their taxation during their last two years with the car. It would also threaten the long-term electrification plans that, many fleets are enthusiastically pursuing right now, including our members.”  

It’s a subject that the AFP is having conversations with HMRC about.  

“All we can do is make HMRC and the Treasury aware of our views and support them with as much evidence as possible. As the fleet industry’s professional organisation, we are working hard to make sure that our voice is heard.”