Rachel Reeves has been urged not to press ahead with a £240 charge for drivers covering 8,000 miles annually. Under a new pay-per-mile car tax plan, electric vehicle (EV) motorists would face a flat 3p charge per mile driven.
However, warnings from experts are urging the Labour Party Chancellor to deviate from her proposed plan. Carwow has suggested that EV motorists with average mileage would face a £240 annual fee under the scheme.
Expert Concerns Over EV Tax Plan
Paul Barker, editor of Auto Express, said: “Most people recognise that you can’t simply absorb the large drop in fuel duty over the coming years. However, the Government’s messaging has been poor and has created uncertainty, which risks delaying EV uptake as some buyers may postpone switching for another car cycle, typically 3–5 years.”
The proposed tax, known as electric Vehicle Excise Duty (eVED), is a mileage-based tax on battery electric and plug-in hybrid cars starting from April 2028. It charges 3 pence per mile for fully electric vehicles and 1.5 pence per mile for plug-in hybrids, replacing the fuel duty that petrol and diesel drivers pay at the pump.
Implementation Timeline
eVED is set to begin on 1 April 2028. The government consultation runs until 18 March 2026, allowing motorists and businesses to provide feedback on implementation details before the system launches.
Paul added: “The point that EVs will still be significantly cheaper to run — particularly with home charging — was largely lost in the noise around the £300 annual figure. The reality is that the shortfall in fuel duty revenue will need to be replaced, and EVs were never going to avoid additional costs indefinitely.”
How the Tax Would Work
Under the scheme, drivers estimate their annual mileage at VED renewal, pay the estimated eVED charge alongside their VED (monthly, bi-annually, or annually), then submit actual mileage at year-end for reconciliation. The government says payment integrates with existing DVLA systems through the same channels used for VED.
The plan has sparked debate, with critics arguing it could discourage EV adoption at a time when the government aims to phase out petrol and diesel cars. Supporters, however, note that EVs remain cheaper to run overall and that the tax is necessary to replace lost fuel duty revenue.
