Chancellor Rachel Reeves is set to unveil a new car tax system that could see some electric vehicle owners paying up to 11p for every mile they drive.
The New 'VED+' Tax System Explained
Government sources have confirmed to The Telegraph that a new per-mile charge of 3p will be introduced for EV owners. This comes on top of the £195 annual VED rate that electric car drivers have been required to pay since April this year, marking the end of their previous exemption from car tax.
The proposed system, dubbed 'VED+' by government insiders, would mean an EV owner covering the average 10,000 miles per year would face a total annual tax bill of £495. This breaks down to £300 in per-mile charges and £195 in standard rate VED.
Significant Cost Variations for Different Drivers
The financial impact will vary considerably depending on charging habits. The situation becomes particularly challenging for the estimated 40% of households without off-road parking.
These drivers, forced to rely on public slow chargers offering speeds of up to 8kW, could face a effective cost of 11.3p per mile – almost double the rate for those who can plug in at home.
It has also been claimed that drivers of hybrid cars, which use both a combustion engine and electric motors, will be subject to the new charge, though reportedly at a lower rate.
Industry Leaders Voice Strong Opposition
The proposed tax changes have been met with significant criticism from industry representatives and campaign groups, who argue this is the wrong time to add further costs for EV drivers.
Tanya Sinclair, CEO of campaign group Electric Vehicles UK, urged the government to stop fuelling speculation, stating: "Rumours about pay-per-mile only unsettle drivers and risk slowing the very market we need to grow."
Vicky Edmonds, CEO of EVA England, echoed this sentiment, calling it the "wrong time to bring in further costs" for those who have invested in electric transport.
Ian Plummer, Commercial Director at Auto Trader, issued a direct warning to the Chancellor, advising her to "think extremely carefully." He emphasised that "drivers respond to incentives and anything that puts up running costs for electric vehicles will slow that momentum."
James Court of Octopus Electric Vehicles pointed to international examples, noting: "As we've seen in other countries, introducing a charge now would stifle the growth we've seen over the past years, and be self-defeating."
The formal announcement of the new tax plan is expected tomorrow, setting the stage for a major debate on the future of road pricing and the UK's transition to electric vehicles.
