The Treasury has defended the introduction of a new road charge that will see drivers covering 10,000 miles a year pay an additional £300 annually. The charge, set at 3p per mile, was announced in the autumn budget and is scheduled to take effect in 2028. It is expected to generate £1.1 billion per year, partially compensating for the decline in fuel duty revenues as motorists transition from petrol to electric vehicles (EVs).
Impact on electric vehicle adoption
Thom Groot, chief executive of The Electric Car Scheme, a leasing company that conducted the analysis, expressed concerns that the tax could hinder EV adoption. He noted that the government is trying to move EV ownership from “early adopters to the mass market,” but the charge might create resistance. “There are still a lot of people in the mass market who are very sceptical about EVs … so anything that gives people a reason not to [buy one] creates yet another boundary,” Groot said.
However, Groot also acknowledged that even with the new tax, the benefits of going electric remain substantial. “Even when this tax comes in, the major savings and environmental benefits of going electric remain firmly in place. EVs will continue to be the most practical and future-proof choice for UK drivers,” he added.
How the charge works
At 3p per mile, a driver covering 10,000 miles annually would pay £300. For those driving 8,000 miles, the charge would be £240. The government argues that the system is fairer than the current one, where EV drivers pay no fuel duty while petrol car owners pay approximately £480 per year. A government spokesperson stated: “Similar to fuel duty, those who drive more will pay more. Right now, electric vehicle drivers pay no fuel duty, while petrol drivers pay around £480 a year. That’s not fair. Under the new system, electric vehicles will pay half the duty of petrol cars – still the cheaper, greener choice.”
Wider implications and concerns
Graham Parkhurst, a professor of sustainable mobility at the University of the West of England, highlighted a significant disparity between domestic and public charging points. Public chargers attract 20% VAT, while home charging is subject to 5% VAT. He described this as a “political timebomb” that could widen the gap between those with off-street parking and those without. “Charging according to how much a vehicle moves makes sense. Fuel duty does that. But we need time to work out how to do this in the context of wider transport taxation. To the extent we need cars, it’s much better that they are electric,” Parkhurst said.
The government has indicated it will consider further support measures for EVs. A spokesperson added: “Fuel duty covers petrol and diesel, but there’s no equivalent for electric vehicles. We want a fairer system for all drivers whilst backing the transition to electric vehicles.”
