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Electric car drivers in the UK could soon face a new tax, as ministers weigh up ways to plug a growing gap in road funding and government revenue.
Electric car drivers in the UK could soon face a new tax, as ministers weigh up ways to plug a growing gap in road funding and government revenue.
A new levy under discussion
Sources told the BBC that the Treasury has held “conversations” about introducing a levy on electric vehicles (EVs) in this month’s Budget. A government spokesperson said officials were exploring a “fairer system for all drivers,” noting that petrol and diesel motorists already pay fuel duty, while EV owners do not.
The Daily Telegraph reported that one option being considered is a pay-per-mile charge from 2028, following a consultation. The plan could see EV drivers pay about 3p per mile — roughly £12 for a trip from London to Edinburgh — with hybrid car owners paying slightly less.
Drivers would estimate their annual mileage and pay in advance. If they drove fewer miles, they would receive a credit; if they exceeded their estimate, they would owe a top-up.
Filling the revenue gap
Fuel duty and vehicle taxes bring in billions for the Treasury each year, but the growing shift to electric vehicles has left a widening shortfall. Electric cars lost their exemption from vehicle excise duty in April, following a change announced in the 2022 Budget.
“We want a fairer system for all drivers whilst backing the transition to electric vehicles,” the government said in a statement. “It is right to seek a tax system that fairly funds roads, infrastructure and public services.”
Ministers highlighted the £4 billion already committed to support EV adoption, including grants worth up to £3,750 per vehicle, and promised to consider new measures to make ownership “more convenient and more affordable.”
Political and industry backlash
The proposal has drawn criticism from across the political spectrum. Shadow chancellor Mel Stride said “another tax raid” on motorists would be the wrong approach, accusing the government of trying to fix a “black hole” in public finances.
Industry bodies and motoring groups also warned the move could slow the transition to cleaner transport. The Society of Motor Manufacturers and Traders (SMMT) called a pay-per-mile tax “the wrong measure, at the wrong time.”
AA president Edmund King said ministers should “tread carefully unless their actions slow down the transition to EVs,” adding that the details would determine whether the plan becomes “a poll tax on wheels.”
Calls for incentives, not penalties
AutoTrader chief executive Nathan Coe argued that the government should rely on “more carrot and less stick.” He said any new levy would raise running costs for EV owners and could discourage new buyers. “EVs already cost more upfront,” he said. “This kind of takes some of that benefit away.”
Liberal Democrat Treasury spokesperson Daisy Cooper also condemned the idea, saying it “beggars belief” that ministers would consider an EV tax during a cost-of-living crisis. “They should be expanding charging infrastructure, not penalising people choosing cleaner cars,” she said.
Sources: BBC, Daily Telegraph, SMMT, AA, AutoTrader
This article is made and published by Asger Risom, who may have used AI in the preparation
