The Labour government's proposed new 3p pay-per-mile car tax is set to effectively increase to 5p per mile for some electric vehicle (EV) drivers, according to a new analysis.
The Real Cost of Charging and Tax
Consumer group Which? has conducted a detailed analysis of EV charging costs across the UK. It found that while charging an EV at home using off-peak electricity rates can cost as little as 2p per mile, using public ultra-rapid chargers is significantly more expensive.
When the government's new 3p surcharge is applied on top of these high public charging rates, the total cost per mile for some EV drivers could reach 5p.
Which? stated, "As you can see, the cost per mile increases dramatically when you charge at a public ultra-rapid charger." For context, they noted that refuelling a typical large petrol or diesel SUV costs around 15p per mile, based on current fuel prices.
Filling the Fuel Duty Gap
The new tax initiative, expected to undergo consultation with implementation not anticipated until 2028, is designed to address a growing financial shortfall. As more motorists switch to electric cars, which are exempt from traditional fuel duty, the Treasury is losing a significant revenue stream.
The government reportedly frames this move as a "matter of fairness," pointing out that petrol and diesel drivers pay an average of £600 a year in fuel duty. This duty currently brings in approximately £24.4 billion annually.
Expert Opinion and Potential Implementation
Professor ManMohan Sodhi, Professor of Operations and Supply Chain Management at Bayes Business School, commented on the rationale behind the tax. "A small tax on electric vehicles (EVs) is very much needed, and rational for many reasons," he said.
He explained that petrol and diesel car drivers already pay about 7p per mile in tax, making a 3p per mile charge for EV drivers not unreasonable. However, he warned that the policy is "politically fraught" and could send mixed messages about EV adoption, potentially causing a "movement away from pure EVs."
Regarding how the tax could be collected, Professor Sodhi suggested a potential method inspired by existing technology. "Black box insurance uses a device in the car to make drivers’ habits transparent to the car insurer... Potentially, such a device could be used with EVs to monitor miles driven for tax purposes."
