Vans expected to be exempt while plug-in hybrids face partial charges
Electric vehicle (EV) owners may soon need to pay a new per-mile charge, as the government looks for ways to replace the billions lost from declining fuel duty revenue. However, it’s understood that electric vans will be exempt from the proposed scheme, while plug-in hybrid drivers could end up paying twice.
What’s Being Proposed
The government is said to be preparing a pay-per-mile tax on electric vehicles, which could be confirmed in the upcoming Budget and introduced around 2028.
At the moment, EV drivers don’t pay fuel duty - something that can save the average driver around £600 a year compared with petrol or diesel motorists. Now that more drivers are switching to electric, the Treasury is generating less revenue from Fuel Duty. This means the time has come for EV drivers to contribute fairly to the costs of maintaining our roads and infrastructure.
How Might the Scheme Work?
The proposed system would see EV drivers paying around 3p per mile, equating to roughly £250 a year for the average motorist. Drivers would estimate their annual mileage in advance, paying the charge alongside their regular vehicle tax.
If you drive more than expected, you’d pay extra at the end of the year; if you drive less, you might get some credit carried over to the following year.
To put this into perspective:
- A trip from London to Edinburgh could cost around £12 in per-mile charges.
- Cambridge to Bristol might cost around £5.
- Liverpool to Leeds would work out at roughly £2.
Plug-In Hybrids Hit Twice
Plug-in hybrid (PHEV) owners are also expected to be included in the scheme - but at a reduced rate compared with full EVs. That means these drivers could face a double hit, paying both fuel duty when using petrol or diesel and the new per-mile levy.
Vans Likely to Be Exempt
In a small win for businesses and tradespeople, electric vans are not expected to be included in the new system. The government appears keen to support the ongoing shift to cleaner commercial fleets, which play a key role in cutting emissions from urban deliveries.
What the Government Says
A government spokesperson recently commented that a “fairer motoring tax system” is needed as the UK transitions to electric vehicles.
Fuel duty covers petrol and diesel, but there’s no equivalent for electric vehicles. We want a fairer system for all drivers whilst backing the transition to electric vehicles, which is why we’ve invested £4bn in support, including grants to cut upfront costs by up to £3,750 per eligible vehicle.
They added that the government remains committed to making EV ownership more convenient and affordable while ensuring a fair way to fund roads, infrastructure, and public services.
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