HM Treasury has defended its introduction of a £300 annual charge for drivers traveling 10,000 miles under a new 3p-per-mile road usage charge announced in the autumn budget. Scheduled to take effect in 2028, this initiative is projected to raise £1.1 billion each year, helping to offset declining fuel duty revenues as motorists increasingly switch from petrol to electric vehicles (EVs).
Thom Groot, CEO of The Electric Car Scheme—a leasing company that analyzed the policy—warned that the tax might discourage EV adoption just as the government encourages the transition from early adopters to mass-market buyers. He emphasized the lingering skepticism among many potential EV buyers, noting, “Anything that gives people a reason not to buy an EV creates another barrier.”
Despite concerns, Groot highlighted the ongoing benefits of electric vehicles, stating, “Even with this tax, EVs remain the most practical and future-proof choice for UK drivers, offering significant savings and environmental advantages.”
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Under the proposed charge, drivers traveling 10,000 miles yearly would face a £300 fee, with those covering 8,000 miles paying £240. Graham Parkhurst, professor of sustainable mobility at the University of the West of England, pointed out the disparity between domestic and public EV charging costs—public chargers include a 20% VAT—which he described as a “political timebomb” that deepens inequality.
Parkhurst supports usage-based charging, which aligns with the principle behind fuel duty, but urges careful consideration within the broader context of transportation taxation. “To the extent we need cars, it’s far better that they are electric,” he asserted.
A government spokesperson explained, “Similar to fuel duty, those who drive more will pay more. Currently, electric vehicle drivers pay no fuel duty, while petrol drivers pay around £480 a year. That’s not fair. Under the new system, electric vehicles will pay half the duty of petrol cars—remaining the cheaper, greener option.”
The spokesperson also confirmed that the government would consider additional support measures for EVs. “Fuel duty applies to petrol and diesel, but there is no equivalent for electric vehicles. We want a fairer system for all drivers while supporting the transition to electric vehicles.”