Chancellor Rachel Reeves has officially confirmed the introduction of a new mileage-based tax for electric vehicle (EV) owners in the UK, marking a significant shift in motoring costs for households. The announcement details a pay-per-mile charge that will apply to drivers using both driveway and public charging points, with the aim of addressing revenue shortfalls as fuel duty declines.
Details of the New Electric Vehicle Excise Duty
The new tax, known as Electric Vehicle Excise Duty (eVED), will be implemented starting in April 2028. It will see EV owners charged at a rate of 3p per mile, while plug-in hybrid drivers will face a lower rate of 1.5p per mile. This means that an average driver covering 10,000 miles annually would incur an additional £300 in costs, adding to the financial pressures of the ongoing cost-of-living crisis.
Impact on Household Budgets and Commuting
With the average British motorist driving approximately 8,500 miles per year, the new levy is expected to increase running costs by hundreds of pounds for many households. Concerns have been raised that this could disproportionately affect individuals with long commutes or those living in rural areas, where alternative transport options are limited. Critics argue that this move unfairly targets EV adopters who have invested in greener technology.
Government Justification and Consultation
Treasury minister Dan Tomlinson outlined the government's rationale, noting that the decline in fuel duty revenue due to the growing adoption of electric vehicles necessitated this change. He emphasised that eVED is designed to ensure all drivers contribute to road maintenance, while still preserving incentives for switching to electric vehicles. A consultation document clarifies that the tax will not require tracking devices in cars or a new administrative system; instead, it will be integrated with existing Vehicle Excise Duty payments.
The government points out that petrol and diesel drivers already pay through fuel costs and duty, making this a step toward tax parity. However, the announcement has sparked debate over its timing and potential impact on the UK's transition to sustainable transport, with some viewing it as a necessary adjustment and others as a setback for environmental goals.
