Rachel Reeves has been slammed over plans to introduce a “completely backwards” car tax rule in the UK. In the Autumn Budget, The Chancellor confirmed the introduction of a new pay-per-mile rule for electric vehicles set to launch in 2028.
The new rule will see owners of electric vehicles pay a 3p per mile rate on top of their annual Vehicle Excise Duty (VED) charges. However, motoring journalist Shahzad Sheikh, founder and presenter of YouTube channel @BrownCarGuy, has questioned the decision.
He suggested Reeves had "pulled the trigger” on new car tax fees “too soon” with combustion models still the most dominant on the road.
Speaking on his YouTube channel, Shahzad said: "EV drivers will pay around 3 pence per mile on top of VED road tax, which EVs is already starting to pay since last year. Plug-in hybrids will also be charged about half that rate. Internally, the fear is simple, stack too many costs on EV ownership and the economic argument starts to collapse completely.
“The Office for Budget Responsibility has already warned that this policy could reduce EV sales by hundreds of thousands over the next five years. Now, let’s talk about why this is happening and why it feels completely backwards."
“As petrol and diesel sales fall with the switch to EVs, the treasury is staring at a potentially massive revenue hole, tens of billions of pounds that currently fund the roads and infrastructure and general Government spending, Electric cars do not pay fuel duty, that was always going to be a problem.
“Although I would argue they are pulling the trigger on all of this a bit too soon. There are just under two million EVs on the road today, but there’s 42 million vehicles in total, so in fact that’s less than 5%.”
The Department for Transport (DfT) is currently consulting over possible changes to eVED rules ahead of a planned 2028 rule change. Officials stressed the policy was being implemented to offset the loss of fuel duty revenues as more road users switch to EVs.
They have predicted that without any intervention, as many as one in five car drivers will be paying no fuel duty at all by 2030. It is understood that taxpayers will estimate their annual mileage, with this then checked by experts at test centres as part of annual MOT checks.
The DfT report added: “All drivers should contribute to account for the wear and tear on our roads, and the funds needed to provide major road investments.”