Motorists in the UK could see a new pay-per-mile tax charge for electric vehicles rise to a higher rate if they attempt to under-report how far they have driven. The Labour government's proposed 'eVED' scheme, which will introduce a charge of 3p per mile, includes a mechanism designed to penalise inaccurate mileage declarations.
How the New Pay-Per-Mile Tax Will Work
Under the incoming system, drivers will be required to estimate their annual mileage in advance and pay an upfront charge based on that figure, with the option to spread payments across the year. At the end of the tax period, they must submit their actual mileage to trigger a financial reconciliation.
Official mileage readings will be taken annually, typically during a vehicle's MOT test. For newer cars, checks will occur around the first and second registration anniversary. The government's budget documents confirm this process, noting it aligns with existing practices.
The Risk of a Higher Future Tax Rate
However, the government acknowledges a potential loophole. Because eVED periods and MOT schedules are not perfectly aligned, some drivers might be tempted to declare a lower mileage than actually driven. The regulations explicitly warn that "by under-declaring mileage, motorists run the risk of their mileage being subject to an increased rate in future years."
Authorities state that under-declaration will ultimately always be discovered. The vehicle's odometer reading affects its sale price when ownership changes, and an official reading is mandatory when a car is scrapped. The Driver and Vehicle Licensing Agency (DVLA) is also exploring additional options to mitigate against delayed declarations and payments.
Industry Concerns Over Fairness and Incentives
The new tax plan has drawn criticism from within the electric vehicle and charging sector. Delvin Lane, chief executive of charging network InstaVolt, warned that the tax could discourage the public from making the switch to electric cars.
He argued that drivers without access to home charging already face higher costs through public charging, and that the policy could disproportionately affect rural and low-income motorists. "We urge the government to work closely with the charging and automotive sectors to co-design a fair, future-proof system," said Mr Lane. He emphasised the need to maintain incentives for switching to zero-emission vehicles while ensuring a sustainable model for road taxation.
The debate highlights the challenges facing policymakers as they seek to replace traditional fuel duty revenues in an era of increasingly popular electric vehicles.
