Reeves poised to unveil Budget plan for EV drivers to pay per mile charges

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Chancellor Rachel Reeves is expected to unveil plans for a per-mile road charge for electric car drivers in the Budget, as she looks to offset an expected sharp fall in fuel taxes, according to people familiar with the matter.

Plans could include road charges on electric vehicles from 2028 after public consultation, and could raise around £1.8 billion a year for the Treasury by the early 2030s.

One proposal being considered by the government would see electric vehicle drivers face a 3p-per-mile charge on top of other road taxes.

The charges are aimed at countering a long-awaited decline in government revenue from fuel duties that apply to petrol and diesel, as more motorists ditch internal combustion engine cars for electric vehicles.

The expected move on per-mile road charges for electric vehicle drivers by Reeves in her Budget on 26 November also appears to be driven by her need to plug a financial gap estimated at between £20bn and £30bn by the end of parliament.

People familiar with the government’s plans said the average electric car driver would pay an extra £250 a year, compared with how the average owner of a petrol or diesel car pays around £600 in fuel surcharges.

Drivers of hybrid cars, which combine electric power with an internal combustion engine, will get fewer charges per mile than zero-emission cars. The Daily Telegraph first reported the story.

The plans will not include tracking EVs on the road, with drivers instead facing annual payments based on estimates of how many miles they expect to travel.

If they drive more miles than estimated, they could pay a top-up fee. Conversely, if they end up driving fewer miles, they will likely be able to carry them over to the following year.

The government is keen to encourage more people to buy electric cars to help meet the UK’s climate targets.

“Fuel duty covers petrol and diesel, but there is no equivalent for electric vehicles,” a government spokesman said on Wednesday, when asked about the possibility of a per-mile charge for electric vehicle drivers.

“We want a fairer system for all drivers while supporting the transition to electric vehicles.”

But the move will be controversial with many motorists as well as politicians. Sir Mel Stride, the shadow chancellor of the chancellor, said: “It is wrong for Rachel Reeves to target commuters and car owners in this way just to help fill the black hole she has created in the public finances.”

Recent governments have refrained from inconveniencing motorists and have repeatedly frozen planned increases in fuel duty linked to inflation.

The Office for Budget Responsibility warned last year that the cumulative cost of the fuel duty freeze from 2010-11 to 2025-26 had risen to around £100bn.

The government highlighted how it will invest £4bn to support electric vehicles “including grants to reduce upfront costs by up to £3,750 per eligible vehicle”.

The government spokesman said: “Just as it is right to seek a tax system that funds roads, infrastructure and public services fairly, we will consider further support measures to make owning electric cars more convenient and affordable.”