New pay-per-mile car tax changes will hit drivers with hundreds of pounds worth of bills in just a matter of years. Rachel Reeves is expected to confirm the introduction of a new 3p pay-per-mile rate for electric vehicles in her Autumn Budget statement.
The charges won’t come into effect until 2028 following a consultation period, but is likely to be a hefty blow to electric car owners across the country. Chris Ball, CEO of financial advisory firm Hoxton Wealth, has predicted the average motorist could be set to pay an additional £300 per year under the new rule. The group warned the policy would have an impact on current and future EV owners, especially those with high annual mileage.
Businesses with electric fleets could be set to face significant cost increases in a blow for firms which made the EV switch up until now. Chris stressed motorists across the UK should start planning now with long-term savings the key to success once the fee strikes.
Chris said: “Drivers should start factoring this into their motoring budgets. If you drive 10,000 miles a year, for example, this could mean an extra £300 annually. Plan by setting aside money each month, monitoring mileage, and reviewing total vehicle costs will be key. EVs still offer long-term savings, but it is worth adjusting expectations and ensuring motoring costs are built into financial planning going forward.”
Although it is expected that electric cars will remain cheaper to run than petrol cars, this new per mile fee will eat into some of those savings. No details on how the policy will work has yet to be fully fleshed out, but it is expected that EV drivers will be asked to estimate their mileage.
Fees will then be paid annually alongside their Vehicle Excise Duty payment, with adjustments made at year-end based on how much drivers actually travelled compared to their prediction. Industry and campaigners have called out the news around Reeves’ potential car tax rise with scepticism.
The SMMT and the AA are among those who have called out the updates, but campaign group FairFuel really called out the concept.
Speaking to Express.co,uk, Howard Cox, founder of FairFuel UK said: “A potential rate of around 3p per mile on top of existing road taxes, which could add £300 annually for the average EV owner driving about 10,000 miles a year.
“While it is accepted that EV drivers should, at last, contribute towards road usage, the proposed pay-per-mile charge is just another anti-motorists “net-zero cash grab. It will particularly penalise rural residents and those who regularly travel long distances.”