British electric vehicle owners are anxiously awaiting the Chancellor's autumn budget, with rumours swirling that a new annual fee of around £250 could be introduced for EV drivers.
The Revenue Challenge Facing the Treasury
With the government committed to phasing out new petrol and diesel car sales from 2030, the Treasury faces a significant financial gap. Fuel duty from traditional vehicles is expected to raise approximately £24.4 billion this year alone – revenue that motoring groups have described as a government 'cash-cow'.
According to reports in the Daily Telegraph, Chancellor Rachel Reeves is drafting plans to introduce a 3p per mile tax for electric vehicles. If implemented following consultation in 2028, this would cost the average EV driver about £250 annually.
Potential Impact on Journeys and EV Adoption
The proposed distance-based charging would make long journeys considerably more expensive. A trip between London and Edinburgh would cost around £12, while travel from Cambridge to Bristol would be approximately £5 under the new system.
This comes as EV ownership continues to grow rapidly across the UK. More than one million people already own electric vehicles, with projections suggesting up to 11 million UK motorists could be driving electric by the start of the next decade.
A government spokesperson acknowledged the current imbalance: 'Fuel duty covers petrol and diesel, but there's no equivalent for electric vehicles. We want a fairer system for all drivers whilst backing the transition to electric vehicles.'
Industry Reaction and Concerns
Campaigners and motoring organisations have urged caution, warning that new taxes could undermine the government's own environmental goals.
Edmund King, AA president, stated that while the government needs to address the loss of fuel duty revenue, it must 'tread carefully'. He expressed concern that the details could reveal whether the plans amount to a 'poll tax on wheels'.
Ginny Buckley, chief executive of Electrifying.com, was more direct: 'Drivers are being encouraged to go electric, then hit with the threat of new taxes. You can't drive the EV transition with one foot on the accelerator and the other on the brake.'
Steve Gooding of the RAC Foundation echoed the 'cash-cow' description and highlighted another critical issue: 'If the Chancellor is tempted to go down the route of introducing a distance charge for EV drivers but still encourage EV take-up, then she needs to look at how to cut the cost of public charging for the millions of people who don't have the option to charge their cars at home.'
The government has emphasised its commitment to the EV transition, noting it has invested £4 billion in support, including grants reducing upfront costs by up to £3,750 per eligible vehicle.
