The Institute of Chartered Accountants in England and Wales (ICAEW) has raised concerns that the proposed electric vehicle (EV) excise duty (eVED) could increase compliance risks and administrative workload.
The comments were made in ICAEW’s response to an HM Treasury consultation on eVED, which is scheduled to be introduced from April 2028.
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Under the current proposal, eVED for electric cars would be set at half of the equivalent fuel duty rate. Plug-in hybrid cars would be charged at half of the electric car rate.
The ICAEW said it recognises the need to respond to falling fuel duty receipts as more drivers switch to EVs. However, it warned that poorly designed processes could create complexity for motorists and affect the policy aim of supporting EV uptake.
The chartered accountancy body said the proposed approach would introduce new administrative obligations for EV drivers.
Under the model outlined, drivers would need to estimate their annual mileage in advance to calculate monthly eVED payments. A reconciliation would then take place at the end of the year to correct underpayments or overpayments.
The ICAEW said the system should operate on an automated “set and forget” basis. It recommended using historic Ministry of Transport test information to auto-populate mileage estimates. It also suggested that the design should include safeguards to reduce the risk of motorists lowering estimates year on year to reduce payments.
Additionally, the organisation pointed to the need for ongoing monitoring of how eVED compares to fuel duty.
In its consultation response, the ICAEW also raised questions about how eVED would work when a used EV is sold. It said that transferring an eVED position to a new owner could lead to unfair outcomes if the buyer becomes responsible for liabilities linked to the previous owner’s driving patterns or mileage estimates.
The organisation recommended a penalty-free period of at least 12 months after eVED is introduced. It also called for a proportionate penalty regime that distinguishes errors from deliberate non-compliance.
ICAEW VAT and Customs technical manager Ed Saltmarsh said: “Feedback from our members indicates concern about what the proposed system will mean in practice.
“The proposal introduces estimation, reconciliation and self-reporting for millions of drivers who have never had to interact with vehicle tax in this way before. Getting the design right from the outset will be crucial.”
