Rachel Reeves’ latest car tax fee is likely to add almost £300 to motoring costs for the “average driver” in the UK.
Rachel Reeves looks set to hit drivers with a new £300 charge (Image: Getty)
Rachel Reeves looks set to confirm a new £300 car tax charge for the average motorist at next week’s Autumn Budget. The Chancellor is believed to be pushing ahead with plans to introduce a 3p pay-per-mile fee for electric car owners as part of a major overhaul.
The new rates would apply to owners of fully-electric models from 2028 in a bid to replace some of the lost fuel duty revenue.It means road users will be charged for every trip they make, with estimates already suggesting a journey from London to Edinburgh could cost road users as much as £12. Paul Barker, editor of Auto Express, has calculated that the “average” driver, travelling just under 10,000 miles per year, could be slapped with bills of almost £300 with business users set to pay even more.
Electric cars will face the new per mile fees from 2028 (Image: Getty)
Paul explained: “According to the latest data from Carwow Leasey, the average annual mileage for an EV is 9,900 miles for a consumer and 11,380 miles for a business vehicle. If the Chancellor were to go ahead with the pledged 3p-per-mile tax on EVs, it would cost the average EV owner nearly £300 a year (£297) – and this is on top of the removal of other incentives, such as the EV exemption on Vehicle Excise Duty.
“For business users, the cost rises to almost £350 a year (£341.40), which, on top of the company car tax exemption rules becoming less and less attractive, just adds another deterrent for business EVs, and it is business sales that are currently driving market growth.
Reeves’ new charge has been called out by experts with industry leaders questioning the decision to disincentive EVs at this stage. The Society of Motor Manufacturers (SMMT) described the idea of a per-mile fee as “the wrong measure, at the wrong time”.
Meanwhile, AA President Edmund King also explained the Government needed to “tread carefully” over fears the new rule could “slow down the transition to EVs”.
Electric car sales are on the up compared to 2024, but petrol vehicles are still a clear leader among new and second-hand car sales. Meanwhile, firms are still struggling to meet Zero Emission Vehicle (ZEV) mandate figures, with EVs accounting for around 22% sales compared to the 28% target.
Paul added: “At a time when EV uptake is critical to meeting emissions targets, increasing the cost of ownership risks slowing the transition to electric and undermining the progress already being made.”
