Will Electric Vehicles be the Target of a New Tax? What You Need to Know!
Amid rising revenue pressures, the UK government may impose a new tax on electric vehicle (EV) drivers in the upcoming Budget. This initiative is part of an effort to equalize taxation across vehicle types, as fuel duty currently applies to petrol and diesel but not to EVs. According to sources, a proposal for a pay-per-mile charge, estimated at 3p per mile, could be introduced by 2028, potentially adding significant costs for drivers on long journeys.
Key Points:
Pay-per-mile charge might add up to £12 on long distance trips (e.g., London to Edinburgh).
The system would require drivers to estimate their annual road usage; excess miles driven would incur additional charges.
The government has noted that as more traditional vehicles transition to electric, there is a growing tax revenue gap that needs to be addressed.
As of April, electric vehicles no longer enjoy exemptions from vehicle excise duty.
The government asserts that they are still committed to supporting the transition to EVs with £4 billion in existing investments, including grants to lower upfront costs by £3,750 for eligible vehicles.
Opposition and Concerns:
Critics, including Shadow Chancellor Mel Stride and organizations like the Society of Motor Manufacturers (SMMT), argue that this plan is misguided and poorly timed. Concerns are raised that taxing EVs could hinder their adoption and contradict the government’s zero emissions goals.
Edmund King from the AA cautioned against actions that might undermine the move towards EVs, emphasizing the need for equitable tax solutions.
Car-selling platforms like Autotrader warn that raising running costs for EVs could diminish their appeal, stressing the importance of keeping electric vehicle ownership accessible.
Liberal Democrat spokesperson Daisy Cooper condemned this proposal, highlighting the need for increased support and infrastructure for EVs rather than imposing additional financial burdens on drivers during a cost-of-living crisis.
The potential new tax reflects a broader debate over funding infrastructure and public services while promoting sustainable transportation solutions.