Chancellor Rachel Reeves has used her Budget announcement to confirm a major new tax for motorists, specifically targeting the growing number of electric vehicle owners.
The New Pay-Per-Mile System
After weeks of intense speculation, the Chancellor confirmed the introduction of a pay-per-mile motoring tax. This new system is a direct response to the government's falling fuel duty revenue, as more Britons make the switch away from petrol and diesel cars each year.
The tax will officially come into effect in April 2028. Under the new rules, drivers of fully electric vehicles (EVs) will be charged 3p for every mile they drive. For owners of plug-in hybrid vehicles, a lower rate of 1.5p per mile will apply.
This means an EV driver covering a typical 10,000 miles per year would face an annual charge of £300.
Industry Reaction and Potential Consequences
The announcement has sparked immediate concern within the electric car industry, with fears it could significantly slow down the UK's transition to cleaner transport.
Simon Williams, head of policy at the RAC, stated: "The Government will be aware that taxing all plug-in vehicles per mile from 2028 could slow down the transition to electric vehicles. This is no doubt why it has expanded the Electric Car Grant. With fuel duty revenue set to decline as more EVs come on to the road, this is one lever the Chancellor clearly feels she can pull to keep the money coming in." He added that "the implementation will be critical, so the devil is very much in the details."
The sentiment was echoed by Matt Galvin, Polestar’s UK managing director, who said: "We have always been clear that EV drivers should contribute their fair share to road costs... But today’s Budget sends the wrong signal by penalising the very drivers who are accelerating the transition to clean transport."
A Double Blow for EV Drivers
This new charge represents a second financial hit for electric car owners in a relatively short period. It comes on the back of a separate vehicle tax hike for EVs that was introduced earlier this year.
John Murray, head of electric vehicles at LCP Delta, highlighted the risk, saying: "The Government’s decision to introduce a £0.03-per-mile tax for EV drivers poses a serious risk to the industry. It makes the switch to electric vehicles less attractive and risks hardening public scepticism at a critical moment for mass adoption."
The government's move signals a clear intent to ensure all motorists contribute to road upkeep, even as the nation moves towards a zero-emission future.
