Pay-Per-Mile Tax for Electric Cars from 2028 Confirmed in Budget
Electric vehicles will be subject to a pay-per-mile charge from April 2028, Rachel Reeves confirmed in the Budget today, in a move that the OBR says will lead to 440,000 fewer EV sales in the next five years. The Mail has more.
In order to raise a predicted £1.9 billion for the Government’s coffers by 2030, the Chancellor used her Budget to confirm the Treasury’s controversial road pricing plans which seek to claw back lost fuel duty revenue as the nation moves to zero emission vehicles.
Road pricing has been batted around for years as MPs have struggled to find ways to fill the £40 billion black hole created by the switch to EVs and the loss of motoring taxes including fuel duty.
Ms Reeves told Parliament today: “All cars contribute to wear and tear on our roads, so it is only right that our motoring taxes cover EVs via a modest per mile levy, with extra support to keep EV ownership attractive.”
The OBR predicts that the move will “reduce demand for electric cars as it increases their lifetime cost”, with an estimated 440,000 fewer EV sales across the next five years. However, this is expected to be offset by a forecast 130,000 increase in EV sales due to EV budget incentives like an rise in the Expensive Car Supplement from £40,000 to £50,000.
Pay-per-mile will see EV owners having to pay a so-called “modest” 3p charge per mile they drive. This is on top of the £195-a-year VED rate electric car drivers now have to pay since April this year.
Plug-in hybrid vehicles (PHEVs) – which have small batteries and are capable of covering up to 90 miles on electric-only models – will also be subject to a 1.5p per mile charge. Both rates will rise annually in line with CPI. …
The OBR has said that the “introduction of the new mileage-based charge on electric cars will offset around one-quarter of the 0.6% of GDP in revenue set to be lost from fuel duty by 2050 due to the transition to electric vehicles”.
Instead of bringing in an invasive system where black boxes are fitted that track vehicle mileage, the Treasury has confirmed that EV drivers will “self-report” their mileage and pay a fee based on that prediction.
If an EV driver overestimated their mileage, the remaining money will be carried over as credit to cover next year’s mileage.
However, if they drive further than originally estimated, they would be required to top up their payment to the Government.
If the Government only charges people once a year then many drivers will face a large lump sum that may be hard to afford in a single payment. …
In 2024, owners of electric cars under three years old drove an average of 10,054 miles, a study by the RAC Foundation calculated.
Petrol models travelled only 7,585 miles while diesel cars just surpassed EVs at 10,728 miles.
At a 3p-a-mile charge, this would mean the typical EV owner would need to cough up £301.62 per annum.
The Mail spoke to five EV drivers to see how it will impact their finances. Read more here.
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It’s not clear which Department will administer it, or how it will be collected, but I suppose it could be the HMRC, in the same fashion used for taxing gross interest. Annual declarations of gross interest, typically provided by banks and building societies, are used to adjust one’s tax code to claw in the outstanding amounts. If they do it that way, it could spread it over the fiscal year, as they do for the outstanding tax on interest.
Of course, you can pay online to the HMRC. They like the odd lump sum from us.
“this would mean the typical EV owner would need to cough up £301.62 per annum”
Diddums. Still a lot less than the taxpayer money shovelled their way.
I do about 10,000 miles a year at 40mpg, at £1.35 a litre I make that £1,500 a year in petrol, about half of which is fuel duty and VAT.
There’s always next year to increase it… and fuel duty is going up in September.
I wonder what sanctions there will be and what spot checks there will be to enforce this.
Surveillance of EVs in real time I expect, or something very like it.
Or just a bill at every MoT, with an especially big one when the vehicle is 3 years old.
MOT is the most logical yes
This doesn’t address the problem
of EVs changing hands between MoT dates
Yes but that is just the staring point. In every future budget there will be the opportunity to raise it to 4p per mile, then 5p per mile then 8p per mile and then slap it on every vehicle, not just EV’s. ——Governments who piss our money down the drain on all manner of crap might always run out of our money, but they never run out of more ways to extract even more of it.
Not quite on topic. Premium brands like Mercedes, BMW and Audi have been taken out of the motability scheme, but interestingly a couple of Chinese owned premium brands, Volvo and Polestar, still remain in it. It seams like nothing happens to upset China these days.
EV drivers will self report their mileage?
Huh?
OK, I’ll self report my earnings. Zero. Well, don’t want to take the piss, so £100 for the year should do it.
Yes, but when they come to sell or have their first MOT, the tax bill and, if required hefty fine, will fall due.
I don’t know what happens if you claim your mileage was almost all done overseas.
It’s almost as if the road network benefits every single person in the UK whether you have a car or not, so it should be paid for out of general taxation.
There’s a lot to be said for governments raising as much money as possible from direct taxes such as income tax, national insurance, inheritance tax etc. as any indirect taxes such as fuel duty, “green levies” on electricity etc. tend to hit the less well off hardest as they spend a larger proportion of their income on these things.
Indirect taxes will always be more popular with governments as it’s much harder for people to work out how much tax their paying rather than just seeing the amount deducted from their pay packet. This means a lot of indirect taxes are stealth taxes that are far less likely to be unpopular compared with an increase in income tax etc.
Yes the main reason is probably stealth, also the desire to try and control behaviour, the convenient excuse that taxing Bad Stuff is somehow virtuous.
I think taxes are a necessary evil and should be collected as efficiently as possible using a simple to understand system that is fair. Where we are now cannot possibly be described as such, and of course we pay far too much.
There is even more to be said for government to stop stealing our money in the first place and wasting it on the lazy, feckless and immigrants.
New cars don’t even need an MOT for 3 years so there’s no official record of your milage anywhere until then. It’s unworkable.
All these EV’s (most cars since 2020 iirc) are online in some form or another – they can access this via the car companies as and when they need to, and there isn’t much you can do to stop them
And they’ll get Horizon to write the software to collect it. What could possibly go wrong?
When it comes to extorting our money they will find ways of making it workable
I’m beginning to loathe the phrase “£x billion black hole”
It’s a budget deficit. The ‘hole’ is of their making.
Did anyone else notice the way they positioned it but sneaked in ‘EV’s AND hybrids’… so if they get their plans implemented as they want them, everyone will end up in a hybrid of some form eventually post 2030… equals pay per mile for everyone, just like that. In fact – fuel duty AND ppm for hybrids…….
I think that’s just plug-in hybrids (for now) though not sure what will be allowed post 2030. Whatever stupidity they do will hopefully all be repealed though.
It doesn’t matter what they say at any point in time. It’s always subject to change.
What is predictable is how it changes. They’re broke and ever broker. So you can 100% be sure they’ll find ways to increase tax or add new taxes. It’s like gravity. A broke government will just go out to the public every time and shake us down some more. As sure as night follows day and day follows night.
I hope to live long enough to see a correction
Don’t we all!
The beginning of road charging for us all. Despicable. One day the government will take our entire salary and give us some of it back. Unless the Great Civil War comes. Then all bets are off. All rules will be cancelled. And all traitors and communists will be punishable.and peoples anger will be vast.
We live in a fantasy world which is being run by communist leaning fovernments and civil services all across Europe. All solutions are socialist. None are ever free enterprise. All must be looked after by the benevolent state run by upper middle class communists (like Lenon and co).
Our people have become communist sympathisers through decades of lies and propaganda by the March Through the Institutions, left.
Wake up, for God’s sake.
Joined up thinking —-Get everyone to buy solar panels then BLOCK THE SUN. Get everyone to buy an EV because there is no road tax then slap them with Pay per Mile. Government are like Matadors that lure us bulls in with their red cape then pull it away. The Matador takes the piss out of the bull, so to the government takes the pure piss out of us.