An update has been given about plans to introduce a 3p pay-per-mile charge for drivers. Rachel Reeves' implementation of a pay-per-mile levy for electric vehicles risks undermining net zero targets, an expert has cautioned. During November's Budget, the Chancellor announced that from April 2028, battery electric vehicle drivers would face a charge of 3p per mile for electric Vehicle Excise Duty.
The decision was prompted by a substantial drop in fuel duty income as increasing numbers of motorists switch from petrol or diesel vehicles to EVs. The Chancellor indicated this revenue would contribute towards road maintenance funding.
The Chancellor informed the Commons at the time: "I will ensure that drivers are taxed according to how much they drive and not just the type of car they own by introducing electric vehicle excise duty on electric cars. This will be payable each year alongside vehicle excise duty at 3p per mile for electric cars and 1.5p for plug-in hybrids, helping us to double road maintenance funding in England over the course of this Parliament."
Furthermore, Ms Reeves stated that £200 million would be allocated towards expanding EV charging infrastructure, while the threshold for the expensive car supplement on EVs would rise to £50,000, which she claimed would save over one million motorists £440 annually.
However, John Wilmot, founder and chief executive of car lease comparison platform LeaseLoco.com, has voiced his concerns that the scheme could put people off transitioning to electric vehicles, hampering the government's net-zero targets. He pointed to fresh YouGov figures suggesting that 55% of prospective new car purchasers were still considering petrol engines, while only 37% were looking at electric options.
John highlighted that electric vehicle owners had already been hit with mounting expenses in recent years, including steeper insurance costs, the roll-out of Vehicle Excise Duty (VED) road tax, and higher charges for charging at home.
While the measure isn't due to take effect until 2028, John warned that it could discourage motorists from going electric, as the switch no longer offers the same financial perks it once did.
He explained: "One of the massive benefits to driving an electric vehicle was that it was far cheaper to run than a petrol or diesel car, but a pay-per-mile tax risks eliminating that advantage, which could make drivers think twice about switching any time soon. It's almost sending mixed messages.
"We want people to switch to electric cars, but they're dealing with limited charging infrastructure and other rising costs, which can leave them questioning whether it's even worth it. A pay-per-mile tax could, unfortunately, slow down the progress of the government's net-zero goals.
"Lower running costs were a huge part of the incentive for going electric. Taking that away risks stalling the momentum we have built by giving people confidence in electric vehicles.
"As a leasing company, we've been seeing more drivers express their interests in electric options than ever before, but there's no doubt that this could make people hesitate.
"Understandably, drivers want clarity before committing to making the switch to electric and it's hard to have confidence when the rules and the costs keep changing."
