Chancellor Rachel Reeves is preparing to introduce a 3p per mile road tax on electric vehicles in the November budget, according to reports. The measure aims to address a significant revenue shortfall as the Treasury faces declining fuel duty income from the growing shift to electric vehicles.
The proposed levy would cost drivers around £240 annually for 8,000 miles travelled. Implementation is slated for 2028 following a consultation period. Under the system, drivers would estimate their annual mileage and pay upfront alongside Vehicle Excise Duty, with adjustments for actual miles driven.
The Treasury is projected to raise £24.4 billion from fuel duty in 2025/26, down from £25 billion the previous year. Petrol and diesel drivers currently pay 52.95p per litre in duty, but electric vehicles bypass this mechanism entirely. Exchequer Secretary Dan Tomlinson said in a parliamentary response: «The Government keeps the tax system under review, with changes announced at fiscal events.»
Industry Concerns
Motoring groups have warned the tax could slow the transition to electric vehicles. AA President Edmund King urged the government to «tread carefully» and questioned whether new taxes would be «equitable or a poll tax on wheels.»
Steve Gooding, Director of the RAC Foundation, said the Treasury's «fuel duty cash-cow» is ending. He added: «If the Chancellor is tempted to go down the route of introducing a distance charge for EV drivers but still encourage EV take-up, then she needs to look at how to cut the cost of public charging for the millions of people who don't have the option to charge their cars at home.»
A government spokesperson defended the approach: «Fuel duty covers petrol and diesel, but there's no equivalent for electric vehicles. We want a fairer system for all drivers whilst backing the transition to electric vehicles, which is why we have invested £4 billion in support, including grants to cut upfront costs by up to £3,750 per eligible vehicle.» YouGov polling on 6 November found 43 per cent of Britons support the idea, while 34 per cent oppose it and 23 per cent remain undecided.
Note: This article was created with Artificial Intelligence (AI).
