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AFP frustrated by lack of future EV BIK rates

Date: 11 August 2021   |   Author: Sean Keywood

A continued absence of BIK tax tables for EVs running up to the end of the decade has been criticised by the Association of Fleet Professionals (AFP).

The organisation has reiterated its previous calls for this information to be published, saying it could be the single best thing the UK Government could do to encourage fleets to electrify. 

The AFP argues that with currently-available rates only running until 2024-25, businesses and employees now entering into four-year vehicle cycles have no indication what the BIK rate will be for 2025-26.

AFP chair Paul Hollick said the organisation had been hoping to see the UK Government published further information on this with its recently published 'greenprint' document, in which it set out its plans for the decarbonisation of all modes of domestic transport by 2050.

However, he said the organisation had instead been frustrated by a lack of detail on the subject, which has particular relevance given the government's previously announced plan to ban sales of new petrol and diesel cars by 2030.

Hollick said: "We've been banging the drum about this for some time, that to make the Government's 2030 electrification deadline workable, we need to have corresponding benefit-in-kind tables in order to strategize effectively. 

"Many fleets, including AFP members, have long-term plans in place predicated on meeting that date but it is clear we need a stable and predictable taxation environment in order to do so."

Hollick said that the AFP was realistic about the future of BIK, and recognised that the rates applied to EVs would probably need to be increased at some point in time.

However, he said the organisation wanted to see this carried out in a transparent and graduated manner.

Hollick said: "As EVs become the dominant power in company cars, which we expect to happen around the middle of this decade, the government could reasonably move to reduce the incentives attached to them or look to other sources of taxation in order to maintain revenue. That makes sense but it needs to be done in a planned and responsible manner.

"Right now, many drivers are returning to company cars and choosing an EV, or taking one through salary sacrifice, in large part because of the minimal taxation they pay. This benefits them financially but also helps the government decarbonise road transport. It is an incentive-and-result approach that is built on trust."

Hollick said the AFP was concerned about a potential situation where the government was caught out by a mass switch to EVs, leading to a knee-jerk reaction.

He said: "What we very much want to avoid is a potential situation where the Treasury of the time suddenly realise that the company car parc is perhaps 60% EV at some point in the mid-late 2020s, and push up BIK substantially. 

"That would be unfair on individual drivers, we believe, and also threaten the responsible, committed long-term electrification plans that many, many fleets are pursuing, including our members. 

"The current, four-year cycle issue is the leading edge of a potential problem that is only going to get bigger.

"We would like to repeat our request to the government to look at this issue in the short-term. Introducing BIK tables up to 2030 would probably be the single best thing, [and a] no-cost action that they could undertake to aid EV take-up by fleets."