At a glance
- The Chancellor is expected to announce a new 3p-per-mile charge for electric vehicle (EV) drivers in the upcoming Budget on November 26.
- The levy, due to start in 2028, would add around £250 a year for EV owners as part of efforts to replace lost fuel duty revenue and ensure all drivers contribute to road upkeep.
- The plan has sparked backlash from critics who call it a “tax on motorists,” while the government argues it’s needed to fill a £30 billion gap in public finances.
New controversial motoring charges are expected to be announced by the Chancellor at the Budget on November 26.
Last month, it was revealed that plans have been drawn up to charge drivers of Electric Vehicles 3p per mile, as well as subjecting them to other road taxes.
The scheme, which will be rolled out from 2028, will cost motorists an extra £250 per year.
The average petrol and diesel user pays approximately £480 a year in fuel duty. The income helps fund public services, including schools, hospitals, and filling potholes.
It is understood that the plans are still under consideration, as EV drivers don’t pay fuel duty, but do contribute to congestion and general wear and tear on roads. Resultantly, the Treasury is set on ensuring all drivers pay their way on the roads.
This new tax is expected to be included in the yearly payment for vehicle excise duty (VED), which EV drivers have been required to pay since April.
EV drivers will now have to work out how many miles they drive per year and then pay a fixed cost of 3p per mile.
If they don’t end up driving as much as they think they will, the money can be transferred to the following year. However, if they go over, they will have to pay the extra.
Hybrid car drivers will still be required to pay, but will be charged less.
This new scheme is estimated to bring in £1.8 billion by 2031.
The Driver and Vehicle Licensing Agency (DVLA) will oversee enforcing the new levy.
This comes as Rachel Reeves continues to reckon with a £30 billion financial black hole in her Budget, which she will announce at the end of the month.
The Chancellor has said increased taxes and spending cuts will be part of that agenda.
She faces pressure to end the temporary 5p-per-litre cut to fuel duty, which was implemented in 2022 after Russia’s war on Ukraine caused oil prices to spike.
Ms Reeves will also be forced to decide whether to keep fuel duty frozen.
The Tories have criticised the government for piling pressure on working families during a cost-of-living crunch.
Sir Mel Stride, the Conservative shadow chancellor, said: “If you own it, Labour will tax it.
“It would be wrong for Rachel Reeves to target commuters and car owners in this way just to help fill a black hole she has created in the public finances.
“With Labour’s cost of living crisis, now is not the time to hit hard-working families and businesses with another tax raid.”
Whilst meeting with international finance leaders in Washington DC this week, the Chancellor said that those with the “broadest shoulders” should pay their fair share of taxes.
She suggested that she would be targeting those with more assets, as opposed to those with higher salaries.
Ginny Buckley, chief executive of EV advice site Electrifying.com, said: "This is yet another example of mixed messaging from the Government.
"Drivers are being encouraged to go electric, then hit with the threat of new taxes - you can't drive the EV transition with one foot on the accelerator and the other on the brake.
"This adds extra cost for EV drivers who can't charge at home and already pay more per mile on public chargers than many petrol drivers.
She added: "It also penalises those who switched in good faith, based on promised savings."
