Chancellor Rachel Reeves Confirms New Pay-Per-Mile Tax for Specific Car Models
Certain drivers will be impacted by a new tax announced by the Government, with Chancellor Rachel Reeves detailing the pay-per-mile charge that targets owners of electric vehicles and plug-in hybrids. This move is set to take effect in April 2028, adding financial burdens for households already managing vehicle tax costs.
Details of the New Tax and Its Implementation
The new tax will apply specifically to electric vehicles and plug-in hybrids, with rates set at 3p per mile for EVs and 1.5p per mile for hybrids. For example, an electric vehicle driver covering 10,000 miles annually will face an additional £300 per year. This charge comes on top of standard vehicle tax, which electric drivers began paying for the first time last year, signaling a shift away from previous incentives for eco-friendly vehicles.
Households considering purchasing electric vehicles in the coming years must factor in these extra costs, especially with the looming ban on new petrol and diesel cars in 2030. There are concerns that these additional charges could negatively impact EV sales, as financial incentives diminish.
Government Justification and Industry Response
Ministers argue that petrol and diesel owners already pay based on mileage through fuel and duty costs, and this new tax aims to bring electric vehicle owners in line with them. However, industry experts express worry about the potential deterrent effect.
Simon England, founder of ALA Insurance, commented: “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.”
This announcement marks a significant change in the landscape for electric vehicle ownership, as perks for driving EVs begin to fade, and households must navigate increased expenses in the transition to greener transport options.
