The government is reportedly considering a 3p per mile charge for electric vehicles (EVs) from 2028, with the plans set to be announced in the upcoming Budget
Proposals that could herald a significant shift in road pricing across the UK have received fresh momentum. Speculation suggests a 3p per mile levy for electric vehicles (EVs) from 2028 might be revealed in Chancellor Rachel Reeves’ forthcoming Budget at the end of November.
Reports suggested the government wants to address falling revenue as the surge in EVs has led fuel duty income to plummet. Motorists travelling 8,000 miles each year could encounter an additional £240 annual tax burden if the 3p per mile framework gets rolled out.
EVs forfeited their vehicle excise duty (VED) exemption this April. Research firm Stonehaven polled 2,249 UK adults, revealing 71% believe EV drivers should contribute at least some taxation for their motoring, whilst just 14% felt they should pay nothing whatsoever.
Backing for an EV levy grows when individuals perceive tangible advantages, the study found. Around 61% of those surveyed expressed support for an EV tax dedicated to enhancing charging networks, climbing to 83% if proceeds went towards repairing potholes.
The poll also showed 47% of people think EV taxation should fund reduced public charging costs, though 16% disagreed, reports Chronicle Live. A briefing paper released by Stonehaven cautioned Ms Reeves could have a “wicked problem” as EV levies might “chill the market” for vehicle sales, thereby diminishing revenue.
The firm suggested establishing a “right to home charge”, cutting public charging expenses, and implementing reduced EV tax rates for current owners. Michael Dnes, Stonehaven’s head of transport policy and a former senior official in the Department for Transport, said: “This polling shows the public are open to a fair deal on EV taxes. But making that deal fair will take some work.
“Right now, there are big differences in how easy it is to go electric, and the system favours people who own a house with a driveway. Others can pay 10 times as much to fill the same battery.
“If the Government wants to impose a new tax while raising sales, it needs new measures to grow the market. More than 10 million homes are frozen out of cheap charging – and that can be fixed.”
Motorists who own petrol and diesel cars pay a levy when they purchase fuel, whilst electric vehicle owners have been able to dodge such charges. The Office for Budget Responsibility states that standard petrol and diesel duties currently stand at 52.95p per litre, which drivers pay at the forecourt on top of VAT.
A recent parliamentary written question has enquired what might occur if pay-per-mile pricing was brought in and doesn’t specify just electric vehicles – even petrol and diesel ones. Conservative Richard Holden asked Rachel Reeves: “What assessment she has made of the potential impact pay-per-mile road pricing on (a) rural motorists, (b) low-income drivers and (c) small businesses.”
Exchequer Secretary to the Treasury Dan Tomlinson has now responded that the system was ‘under review’ with any changes to be announced at ‘fiscal events’: “Fuel duty is projected to raise £24.4bn in 2025/26 and will remain in place. At Autumn Budget 2024, the Government announced continued support for people and businesses by extending the temporary 5p fuel duty cut and cancelling the planned increase in line with inflation for 2025/26.
“The Chancellor meets with her Ministerial colleagues on a regular basis to discuss a wide range of issues. The Government keeps the tax system under review, with changes announced at fiscal events.”
Chancellor Rachel Reeves is expected to reveal plans for a 3p per mile levy on EVs when she presents her November 26 Budget, according to the Daily Telegraph. The proposal is scheduled to come into effect in 2028 following consultation, and would see electric vehicle owners paying roughly £250 annually, the publication claimed.
Motoring organisations have voiced worries that such a charge might deter people from making the switch to electric vehicles. The Treasury is facing declining income from fuel duty as increasing numbers of motorists transition from petrol or diesel vehicles to EVs.
Fuel duty generated just under £25 billion during the 2024/25 financial year. Previous administrations have considered the introduction of per-mile driving charges – often called road pricing – too politically damaging to pursue.
Motorists who clock up more miles will need to top up this amount, while any unused funds could roll over to the following year. To give you an idea, a 3p per mile fee would equate to £12 for a journey from London to Edinburgh, £5 from Cambridge to Bristol, and £2 from Liverpool to Leeds.
A Government spokesperson explained: “Fuel duty covers petrol and diesel, but there’s no equivalent for electric vehicles. We want a fairer system for all drivers whilst backing the transition to electric vehicles, which is why we have invested £4 billion in support, including grants to cut upfront costs by up to £3,750 per eligible vehicle.
“Just as it is right to seek a tax system that fairly funds roads, infrastructure and public services, we will look at further support measures to make owning electric vehicles more convenient and more affordable.”
Edmund King, president of the AA, acknowledged that the Treasury faces losing fuel duty revenue, but urged the Government to “tread carefully” to avoid slowing the transition to EVs. He said: “We need to see the detail of this proposal to ascertain whether these new taxes will be equitable or a poll tax on wheels.”
Steve Gooding, director of the RAC Foundation, a motoring research charity, has stated that the Treasury’s “fuel duty cash-cow” is nearing its end. He further added: “If the Chancellor is tempted to go down the route of introducing a distance charge for EV drivers but still encourage EV take-up, then she needs to look at how to cut the cost of public charging for the millions of people who don’t have the option to charge their cars at home.”
Recent snap polling by YouGov indicates that Brits are generally in favour of a pay-per-mile tax for electric vehicles (EVs). A survey conducted on 6 November, involving 5,833 adults across Great Britain, revealed that 43% either “strongly support” or “somewhat support” the idea, while 34% either “somewhat oppose” or “strongly oppose” it.
Meanwhile, 23% responded with “don’t know”. Interestingly, YouGov’s findings also suggest that older individuals are more likely to back the idea compared to younger ones.
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