The Association of Fleet Professionals (AFP) has expressed its concern over the scrapping of the plug-in car scheme and what this could mean for fleet drivers looking to transition to electric vehicles.
The AFP is mainly concerned about the future of Benefit in Kind (BIK) taxation rates, which have traditionally always been low for EV drivers. Low BIK rates encouraged drivers to switch to EVs, but the removal of the plug-in grant is being seen as a possible sign that the Government is considering reducing its support for the EV market.
“Fleets have been at the forefront of the electric car revolution and a key factor behind this has been the low benefit-in-kind taxation on offer to drivers, a fraction of that charged to petrol and diesel company car users. It’s been a highly successful incentive,” said chair of the AFP Paul Hollick.
“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.”
The loss of the plug-in grant scheme will not in itself affect fleet drivers, but Hollick believes that it may indicate that the Government believes that the electric vehicle market is now strong enough to support itself.
The AFP appreciates that taxation on EVs will need to rise as their share of the new car market grows, but Hollick says that “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.”
A driver ordering an EV today and driving it for a four year cycle would pay 2% BIK tax for the first two years, but would have no idea of what the BIK rate could be for the following two years.
“All we can do is make HMRC and the Treasury aware of our views and support them with as much evidence as possible,” said Hollick.