Chancellor Rachel Reeves has confirmed new tax measures that will hit drivers of electric vehicles (EVs) hard, with some facing an extra £500 in charges. The changes include a pay-per-mile tax and the end of the exemption from standard vehicle tax for EVs.
Pay-Per-Mile Tax Details
From April 2028, a new pay-per-mile tax will charge EV drivers 3p per mile. For a driver covering 10,000 miles annually, this amounts to £300 per year. The tax is designed to replace lost revenue from fuel duty as more drivers switch to electric.
Standard Vehicle Tax for EVs
Additionally, EVs will no longer be exempt from standard vehicle tax. For most newer models made after 2017, the standard rate is £200 per year. Combined with the pay-per-mile charge, the average EV owner will pay around £500 annually.
This marks a significant shift in tax policy. Previously, EVs enjoyed tax breaks to encourage adoption. However, the Treasury now targets them to boost revenue, raising concerns that it may deter people from switching to electric ahead of the 2030 ban on new petrol and diesel cars.
Industry Reaction
Simon England, founder of ALA Insurance, warned: “Drivers are being encouraged to switch to electric cars ahead of the 2030 ban on ICE vehicles but financial incentives are quickly disappearing. If EV drivers are expected to pay the same, or more, than petrol and diesel drivers, then that’s a legitimate barrier that will deter thousands of road users from switching.”
He added: “The rise in EV adoption will leave quite a gap in the Government’s revenue from road tax, but raising taxes for electric cars is definitely off-putting to people considering a switch, especially when they won’t have a choice from 2030, as it stands.”
The changes continue a trend of shifting tax policy towards EVs, which were previously afforded tax breaks. Industry experts fear it could slow the transition to electric vehicles.
