UK EVs will be taxed 3p per mile and charged on foreign roads as Reeves unveils pay per mile plan
British motorists travelling abroad will be effectively taxed twice under Rachel Reeves' new pay-per-mile scheme. The Chancellor is expected to announce a new levy for electric vehicle (EV) drivers in the upcoming budget. Treasury sources told the Daily Mail that EV owners will be charged 3p per mile on top of other road taxes. The tariff will also apply motorists when they are driving on foreign roads. Drivers visiting France would pay the new tax on top of the 'péage' tolls, which exist on French motorways, effectively taxing them twice. On average a 2 462-kilometre trip from Calais to Nice would cost an extra £45.90. Critics of the new policy said that the fees applying on non-UK roads was 'unfair and a huge flaw'. The average EV driver will pay an extra £250 per year by 2028 under the new tax. Chancellor of the Exchequer Rachel Reeves is expected to announce a new road-charging tax for electric vehicles in the budget later this month Meanwhile, hybrid cars will also face a new, but lower, charge. The Treasury will reportedly make the case that the new tax is needed to cover falling fuel duty revenue as more and more vehicle owners go green, with up to six million extra EVs expected to be on the roads by the time the scheme is introduced. Reeves will also argue the move will be fairer as petrol drivers already pay £600 a year on average in fuel duty. It will also help the Treasury raise an estimated £1.8billion by 2031 and help plug a fiscal hole caused by the green transition due to the loss of revenue from petrol cars. Edmund King, president of the AA, told The Telegraph: 'You would effectively be paying tax twice – to both the French and UK Government. I can't really see any practical way around it. It would be pretty bureaucratic to have to check your mileage at Dover and have it stamped on some kind of certificate to say you're leaving the country for two weeks. There are already concerns about the extra checks at the borders, so I think it would be a nightmare. It seems EV drivers would have to pay double taxation.' The scheme would be aligned to the annual payment of vehicle excise duty (VED), which affects all UK motorists and EV drivers have had to pay the charge since April. EV owners will be charged 3p per mile on top of other road taxes under a proposed new tax The new element is being described as 'VED+' and being framed as a way to get drivers of green cars to pay more each year. EV drivers will have to estimate the number of miles they will drive in the year ahead and pay a fee. Motorists need not worry if they fail to reach that amount, as the money can be carried over into the next year. If they drive more miles than estimated, they would top up their payment. Pay-per-mile taxes have been discussed for decades by ministers as a long-term replacement to fuel duty. The 52.95p per litre levy on petrol and diesel currently raises £25bn a year, with an additional £5billion made from the VAT. However repeated polls have shown that road-pricing is very unpopular among drivers and has been branded a 'poll tax on wheels' which amounts to an extra 'stealth road tax'. But critics warned any hikes on drivers would be 'disastrous' amid a cost-of-living squeeze and because it would threaten to stoke inflation. EV drivers will have to estimate the number of miles they will drive in the year ahead and pay a fee The Treasury did not rule out a 3p tariff for overseas mileage. A spokesman said: 'Just as it is right to seek a tax system that fairly funds roads, infrastructure and public services, we will look at further support measures to make owning electric vehicles more convenient and more affordable.' Concerns have also been raised that the tax could be extended to all cars. On top of this, Reeves is also considering scrapping the 5p a litre Fuel Duty relief in her Budget this month, in what would be a £2billion to £3billion raid on hard-pressed drivers.
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How the pay‑per‑mile plan would work and what it could mean for drivers
The scheme would be aligned to the annual payment of vehicle excise duty (VED), which affects all UK motorists and EV drivers have had to pay the charge since April. EV owners will be charged 3p per mile on top of other road taxes under a proposed new tax. The new element is being described as 'VED+' and being framed as a way to get drivers of green cars to pay more each year. EV drivers will have to estimate the number of miles they will drive in the year ahead and pay a fee. Motorists need not worry if they fail to reach that amount, as the money can be carried over into the next year. If they drive more miles than estimated, they would top up their payment. Pay-per-mile taxes have been discussed for decades by ministers as a long-term replacement to fuel duty. The 52.95p per litre levy on petrol and diesel currently raises £25bn a year, with an additional £5billion made from the VAT. The Treasury did not rule out a 3p tariff for overseas mileage. A spokesman said: 'Just as it is right to seek a tax system that fairly funds roads, infrastructure and public services, we will look at further support measures to make owning electric vehicles more convenient and more affordable.' Concerns have also been raised that the tax could be extended to all cars. On top of this, Reeves is also considering scrapping the 5p a litre Fuel Duty relief in her Budget this month, in what would be a £2billion to £3billion raid on hard-pressed drivers.
Projected costs and fiscal rationale
The Treasury will reportedly make the case that the new tax is needed to cover falling fuel duty revenue as more and more vehicle owners go green, with up to six million extra EVs expected to be on the roads by the time the scheme is introduced. Reeves will also argue the move will be fairer as petrol drivers already pay £600 a year on average in fuel duty. It will also help the Treasury raise an estimated £1.8billion by 2031 and help plug a fiscal hole caused by the green transition due to the loss of revenue from petrol cars. The average EV driver will pay an extra £250 per year by 2028 under the new tax.
Critics warn of double taxation and bureaucracy
Edmund King, president of the AA, told The Telegraph: 'You would effectively be paying tax twice – to both the French and UK Government. I can't really see any practical way around it. It would be pretty bureaucratic to have to check your mileage at Dover and have it stamped on some kind of certificate to say you're leaving the country for two weeks. There are already concerns about the extra checks at the borders, so I think it would be a nightmare. It seems EV drivers would have to pay double taxation.' The scheme would be aligned to the annual payment of vehicle excise duty (VED), which affects all UK motorists and EV drivers have had to pay the charge since April. The Treasury did not rule out a 3p tariff for overseas mileage. A spokesman said: 'Just as it is right to seek a tax system that fairly funds roads, infrastructure and public services, we will look at further support measures to make owning electric vehicles more convenient and more affordable.' Concerns have also been raised that the tax could be extended to all cars.
