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2028 rollout risks hitting EV demand at a critical moment in the transition, potentially sparking a repeat of New Zealand’s 50% EV sales decline
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Delaying Electric Vehicle Excise Duty until 2030 would protect electric vehicle sales, as no new petrol or diesel vehicles would be on sale
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Coalition of BEAMA, EVA England, ChargeUK and REA call on the Government to delay until 2030
New EV pay-per-mile tax could cost UK economy up to £4.8bn if introduced in 2028, research from BEAMA warns
Bringing in the Electric Vehicle Excise Duty (eVED) in 2028 could cost the UK economy up to £4.8 billion under worst-case scenarios, according to UK trade association BEAMA. This cost would exceed the total revenue the new tax policy is forecast to raise by 2031 (around £4.3 billion).
The forecast is based on BEAMA research which shows that if EV sales collapse at a similar rate to when New Zealand introduced a pay-per-kilometre tax (>50% decline), and sales aren’t replaced by petrol or diesel cars, the Treasury could lose £4.8bn in 2028 and potentially more in 2029
A loss of £4.8bn represents a worst-case scenario, whereby the eVED forces people and companies to delay EV purchases without buying a petrol or diesel alternative. If, however, the eVED prompts all potential EV purchases to be replaced with petrol- and diesel-powered car purchases, the result would still cost the UK economy £890 million in lost tax receipts and compliance costs, in the first year alone: £630 million in lost VAT receipts and £260 million in compliance for car leasing companies.
BEAMA, EVA England, ChargeUK and REA are calling out the fiscal contradictions in the current policy. The coalition - representing EV charging providers, manufacturers, leasing firms, driver groups, investors and insurers - argues that introducing the tax in 2028 will damage consumer confidence, suppress demand and create unworkable conditions for leasing companies and fleet operators.
The coalition has written to Daniel Tomlinson MP, Exchequer Secretary to the Treasury to highlight how the introduction of this tax in 2028 will also delay planned investments in the charging sector. It is calling on the Government to #DontTaxTheTransition.
The coalition believes:
Matt Adams, Head of Electrical Transport Systems at BEAMA: “Introducing the pay-per-mile policy early is a fiscal own goal. It will slow EV uptake, reduce EV charging investments, and cost the UK economy more than the treasury stands to raise with the taxation. A delay to 2030 would provide essential stability at a critical point in the EV transition. Manufacturers in the EV supply chain need a clear message from government to continue investment into local communities and the wider UK economy.”
Vicky Edmonds, CEO of EVA England: “eVED must be delayed until the Government can prove the proposals work for drivers. The current proposals risk leaving EV owners out of pocket and eroding confidence amongst those thinking about making the switch to electric, particularly lower and middle-income households and those without access to private charging.”
Mark Constable, Head of Transport Policy, REA: “The three pence per mile taxation mechanism will create significant aggravation for drivers. The process is simply not fit for purpose, is certainly not scalable, and also opens the system to fraud and unfairness. Consumers shouldn’t tolerate this form of taxation.”
Jarrod Birch, Head of Policy and Public Affairs, ChargeUK: "The three pence per mile tax is another contradiction at the heart of government's EV policy which will impact those who cannot charge at home the hardest. EVs are experiencing a surge of interest as an alternative to rollercoaster petrol prices. Government should be doubling down on the transition by making buying and charging an EV affordable for all."
