Rachel Reeves has been called out for introducing a major tax change that could increase bills by as much as £300 per year. The Chancellor confirmed the introduction of a new pay-per-mile charge for electric cars from 2028 in her Autumn Statement.
The new rule will see motorists charged 3p per mile to use the roads, meaning a driver travelling an average of 10,000 miles per year will pay £300 more. However, the rule has been attacked by industry experts, with electric car firms likely to be among those to feel the sting. At the same time, Ms Reeves confirmed plans to increase the electric car grant by an average of £ 0.3 billion between 2025-26 and 2029-30.
Matt Galvin, Managing Director of Polestar UK, stressed that introducing EV relief at the same time as increasing taxes was a baffling decision.
Speaking exclusively to the Express, Matt said: “Based on average mileage, estimates suggest the new rule could add £250–£300 to annual bills for electric car owners. On this basis, it is equitable to review fuel duty on petrol and diesel cars, which contribute to respiratory diseases, which has not been raised since 2011. Instead of addressing this, the government is choosing to de-incentivise the move to EVs.”
Matt added: “This is clearly a confused message from the Government, on one hand recently incentivising the move to zero emission driving with the Electric Car Grant and on the other planning to take this away with tax rises.”
Ahead of the Budget, there was concern that the move could deter motorists from making the switch to electric vehicles. The Office for Budget Responsibility (OBR) has even admitted that demand could fall with a reduction of 440,000 electric vehicles expected.
Simon Williams, RAC head of policy, explained: “The Government will be aware that taxing all plug-in vehicles per mile from 2028 could slow down the transition to electric vehicles. This is no doubt why it has expanded the Electric Car Grant.”
However, AA President Edmund King has raised doubts over how the scheme could be monitored, suggesting that the AA will lead the charge for a fair and transparent system.
Mr King added: “Getting the timing right is crucial, and there will be concerns that should pay-per-mile for EVs be introduced too soon it may slow down the switch to electric cars.”