Rachel Reeves looks set to confirm the latest motoring tax to hit UK drivers, and the damage could be long lasting.
Rachel Reeves’s pay-per-mile tax has not gone down well with the car industry (Image: Getty)
Rachel Reeves may have just hammered the final nail in the coffin for electric cars in Britain. For years, politicians have urged drivers to make the switch from petrol and diesel machines to electric cars, with cheaper running costs heralded as one of the leading incentives.
EV owners used to enjoy the benefit of free Vehicle Excise Duty, a crucial motivation that no doubt helped convince many motorists to make the switch. A previous poll of 6,000 individuals from FleetNews found that 69% of drivers said “price” and “tax benefits” were their main reasons for choosing an electric model. A former EVA England report also found that almost a third of petrol and diesel drivers said lower running costs were the primary motivation to switch.
The move could put people off buying electric cars (Image: Getty)
That was until Rachel Reeves decided to press ahead with plans to change the rules last year, introducing the first EV car tax last April. Oh well, it was only £10 a year for brand new electric cars and a £195 standard rate charge for models registered after 2017.
It looked hardly anything when compared to Reeves’s doubling of petrol and diesel first-year rates to as high as £5,490. However, news of a 3p pay-per-mile charge for EV drivers on top of existing tax from 2028 will hit many road users like a sledgehammer, with early predictions suggesting that bills could rise by £250 per year.
A journey between Cambridge and Oxford would cost vehicle owners around £3, with drivers likely to pay £12 to drive between London and Edinburgh. Although many see a mileage charge as more fair, these fees are controversial as some will benefit more than others.
A new pay-per-mile fee looks set to be introduced in 2028 (Image: Getty)
Work from home? You’re likely to save money. Travel up and down the country commuting, and you’re paying more. What’s been interesting to witness is the reaction from industry leaders hours after the news was leaked, with genuine concern over what this means for the future of electric cars on the road.
The Society of Motor Manufacturers and Traders (SMMT) stressed the move would be “the wrong measure at the wrong time” at a pivotal moment in the UK’s EV transition. They fear the move could deter consumers, and in turn undermine car manufacturers’ ability to meet the ZEV mandate targets.
AA President Edmund King explained: “The Government has to tread carefully [otherwise] their actions [could] slow down the transition to EVs. The ZEV mandate for 28% of new car sales to be zero emissions this year will not be met as sales are running at just 22%.”
Manufacturers are already struggling to meet ZEV mandate targets (Image: Getty)
Electric cars are on the rise, but they are yet to become truly mainstream with brand new petrol models still accounting for most new cars sold (64,360 petrol cars vs 36,830 electric in October 2025). Professor ManMohan Sodhi, Professor of Operations and Supply Chain Management at Bayes Business School, also raised fears.
He suggested that although a 3p-per-mile fee is “not unreasonable”, the charge will be running through drivers’ minds as they stand at the dealership forecourt.
Professor Sodhi explained: “The move will be widely condemned for sending mixed messages about EV adoption, and without doubt there will be movement away from pure EVs at the very least.”
Labour is forcing manufacturers to build more electric cars with strict production ZEV mandate criteria and then at the same time make it even harder to sell them to the public. Does Labour want car firms to simply go bust? Reeves and Labour need to decide what’s more important in 2025. Meeting their push for EV adoption, or filling their supposed £50billion black hole in public finances.
Reeves should have delayed her pay-per-mile fee until at least 2030 or beyond when electric cars have really reached the masses. Pushing this through only risks the UK’s electric car future at its most crucial crossroads.
