Rachel Reeves, the Labour Party Chancellor, has confirmed a new pay-per-mile car tax system set to launch in 2028, introducing a significant change for electric vehicle (EV) drivers. Under the proposed rules, EV drivers will pay 3p per mile, resulting in a £240 charge for those covering 8,000 miles annually. When combined with the standard Vehicle Excise Duty (VED) rate of £195, the total cost for these drivers would reach £435.
Details of the New Tax
The system, nicknamed "VED+" and officially known as "eVED," will apply on top of the existing annual road tax already paid by EV owners. The government aims to address revenue shortfalls as more drivers switch to electric vehicles, which currently pay no fuel duty.
Concerns Over Fairness
The British Vehicle Rental and Leasing Association (BVRLA) has raised concerns about the potential for an "EV postcode penalty." Analysis from the organisation reveals that annual bills will vary significantly based on location, rather than income or pollution levels. Drivers in rural areas like Caithness or Norfolk could pay three times more than those in central London, due to higher mileage requirements.
Toby Poston, chief executive of the BVRLA, criticised the plans, stating: "People who live in less connected areas don't drive more because they want to; they drive more because they have no choice. Their towns don't have the luxury of networks of trains, tubes and cycle lanes that make car-free living possible in cities."
Impact on EV Adoption
Electric Car Scheme commented: "The government has announced a pay-per-mile charge for electric vehicles in addition to existing VED. Many EV drivers want to understand the potential impact on their motoring costs." The new tax could discourage some drivers from switching to electric cars, particularly those in rural areas who rely heavily on their vehicles.
The BVRLA study concluded: "At 3p per mile - the proposed pay-per-mile eVED rate - annual bills will vary enormously, depending not on how much a driver earns, or how much they pollute, but simply on where they live." This has sparked debate about the fairness of the system and its potential to disproportionately affect lower-income households in regions with limited public transport.
