Chancellor Rachel Reeves confirmed the new pay-per-mile tax on Wednesday
Millions of electric vehicle drivers face a new tax that could cost more than £250 a year, after Chancellor Rachel Reeves announced the new policy in the Autumn Budget.
The new pay-per-mile tax will be introduced in 2028 and see EV motorists pay an extra 3p every mile, in a measure expected to raise £1.4billion in taxes.
In a leaked report ahead of the Budget, the Office for Budget Responsibility wrote that the measure will mean 440,000 fewer TVs on the road because of the policy.
The government is trying to phase out sales of new petrol and diesel cars by 2030.
An average EV owner driving 8,500 a year could face a charge of up to £255 a year in 2028-29.
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The new policy came under fire from car industry figures with Ian Plummer, chief commercial officer at Autotrader saying Reeves is ‘driving with the handbrake on’.
‘This sends completely the wrong signal,’ he said, adding that mvoes to make EVs more affordable would only offset a small portion of the lost sales.
Reeves will also increase fuel duty for the first time in 16 years, with the 5p per litre cut in duty introduced by the Conservative government in 2022 only being extended until September 2026.
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From April 2027, fuel duty rates will be increased annually with inflation, the document said. The duty has not risen since 2010.
RAC head of policy Simon Williams said: ‘Drivers will be relieved the Chancellor has decided to keep the 5p duty cut in place for now as it saves them more than £3 a tank.
‘But this relief will be very short-lived given the staggered increase from next September.
‘Without the discount, drivers would still be paying more for a litre of petrol than they were prior to Russia’s invasion of Ukraine in February 2022 which sent pump prices rocketing to record levels.’
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