Experts have called for new pay-per-mile car tax updates ahead of the Autumn Budget, with lots of discussion about possible change with just weeks to go before Rachel Reeves’ statement. The Resolution Foundation has led calls for updates, with the group suggesting a new weight-based electric car fee linked to vehicle mileage in their latest ‘Call of Duties’ report.
The campaigners suggested that a sliding scale of fees, with the lightest electric cars charged the least. Their proposals would see EVs weighing 1,000kg charged at around 3p per mile, with heavier models around 2,800kg issued 9p per mile fees. The group said weight-fees could launch without a mileage element, but suggested that linking fees to distance would “make the tax fairer”.
In their Call of Duties report, The Resoluto Foundation said: “To give some illustrative figures: Fuel Duty equates to around 6p + VAT per mile for a typical car, so EV VED could be applied at (say) 6p per mile (and no VAT) for a car weighing a typical 1,800kg. The charge for a light, 1,000kg EV could then be proportionally lower at around 3p per mile; and a 2,800kg car would be charged around 9p per mile.”
Experts stressed that the new VED system would be a “material change” to the cost of driving electric vehicles. However, their system would still ensure electric models would “remain cheaper” than running petrol and diesel models.
Distance could be logged via a mixture of MOTs, self-reporting and ideally telematics tools. In an update, the Treasury explained that the Chancellor keeps all taxes under review, with decisions made at fiscal events. Treasury chiefs stressed that they do not comment on speculation about tax changes ahead of the Budget scheduled for November.
In a statement, the Treasury previously told Express.co.uk: “Our balanced approach helps to protect public finances during the transition to electric vehicles. We have introduced Vehicle Excise Duty on Electric Vehicles while providing £1.4bn to boost sales and £650m in grants to cut upfront costs by up to £3,750 per vehicle.”
Motoring experts at Cawow have also addressed the proposal, with experts predicting that EVs would still work out far cheaper to run than combustion models.
They added: “With fuel duty revenues falling as more people go electric, experts warn the Treasury will eventually need to find a replacement. Pay-per-mile charging, linked to vehicle weight, is one of the leading options being floated.
“Drivers don’t need to worry about an immediate new tax, but it’s worth knowing that the debate has begun. If Labour takes up the proposal in future, EVs could lose their tax-free advantage, and heavier models may become significantly more expensive to run.”