Budget 2026: Indirect Tax
Electric Vehicle Excise Duty (eVED)
This will be introduced on 1st April 2028. It will apply to Battery Electric Vehicles (BEVs), Plug-in Hybrid Electric Vehicles (PHEVs) and Hydrogen Fuel Cell Electric Vehicles (HFCEVs). The rates of tax will be 3 pence per mile for BEVs and HFCEVs and 1.5 pence per mile for PHEVs. The rate will be updated in 2029/30, and in future years, in line with the Consumer Prices Index.
To renew eVED alongside Vehicle Excise Duty (VED) and calculate the amount due, motorists will be required to provide an odometer (mileage) reading and estimate their expected mileage for the forthcoming tax period, typically one year.
Gravita’s view
As we wrote last year, the Government is quite rightly looking to replace some of the lost revenues from the use of EVs and PHEVs by motorists. After all, there are now an estimated 3 million on UK roads already.
It seems to us that, rather than opting for a simple solution, the government has chosen a more complex approach. Why not simply increase the annual road tax for EVs and apply a smaller increase for those who drive a PHEV? While there would inevitably be some winners and losers, the same is already true for motorists driving petrol and diesel vehicles. But the cost of administration will be minimal, there would be little room to avoid it as there will be with this proposal, and therefore the compliance levels will be very high and the cost of enforcement very low.
Let’s see what happens!
Plastic Packaging Tax
The rate of Plastic Packaging Tax (PPT) for packaging containing less than 30% recycled plastic will increase from £228.82 to £236.56 per tonne on 1st April 2027, in line with the Consumer Price Index.
From 1st April 2030 the government will introduce mandatory certification for businesses claiming an exemption from PPT on the basis it meets the 30% threshold.
Machine Games Duty
From 1st April 2028 machine suppliers will become liable for Machine Games Duty on supplier-owned machines operated under profit-share arrangements. Premises licence holders, permit holders and pub tenants will remain liable where they own the machine outright or use it under a fixed rental or lease arrangement and control the takings. The government is consulting on the implementation of this change until 20th January 2027.
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