The UK government is reportedly planning to introduce a pay-per-mile road tax scheme for electric vehicles (EVs), starting in 2028. This initiative, potentially announced in the upcoming November budget, aims to address the decline in fuel duty revenue as more drivers switch to EVs. Chancellor Rachel Reeves is proposing a charge of three pence per mile driven, levied on top of existing Vehicle Excise Duty (VED) – often referred to as road tax.
The Potential Impact on EV Drivers
This new tax could significantly impact EV owners. A simple one-way journey between London and Oxford would cost almost £2 in additional road tax, while a return trip from London to Manchester could amount to nearly £13. The Telegraph estimates that the scheme could add up to £250 annually to an EV driver’s expenses.
Addressing Lost Revenue and its Implications
The shift towards electric vehicles presents a challenge for the government, as billions of pounds in fuel duty revenue are projected to disappear. Proponents of the pay-per-mile scheme argue it’s a necessary measure to replace this lost income and maintain the nation’s infrastructure. However, the automotive industry, already facing difficulties meeting stringent ZEV Mandate sales targets, is likely to view this as a counterproductive policy.
Political Reactions and Concerns
The proposal has already drawn criticism. Conservative shadow chancellor Mel Stride described the plan as “taxing commuters and car owners,” suggesting it’s a way to plug a hole in public finances. This highlights the political sensitivity of the issue and the potential for backlash from drivers and the automotive sector.
How the Scheme Could Work – and the Remaining Questions
Unlike some initial fears, the scheme won’t require tracking devices installed in cars. Instead, charges will be based on estimates of how far drivers travel.
Enforcement and Data Collection
How these estimates will be generated remains unclear. The government might leverage existing infrastructure: Automatic Numberplate Recognition (ANPR) cameras, currently used to verify VED payments, alongside checks during MOT tests, could be employed for enforcement.
While the move aims to replace lost fuel duty revenue, questions linger about data privacy and the accuracy of mileage estimations.
HM Treasury and the Department for Transport have yet to comment on the specifics of the scheme, leaving many details still to be revealed. The introduction of a pay-per-mile road tax raises complex questions about how to balance the need for sustainable funding of roads with the affordability and appeal of electric vehicle ownership.
The proposed scheme, if implemented, could fundamentally reshape the economics of driving in the UK, impacting both drivers and the automotive industry.
