Industry reacts: pay-per-mile tax on EVs 'entirely the wrong measure'

Car industry body the Society of Motor Manufacturers and Traders (SMMT) has called the proposed pay-per-mile tax on electric vehicles "entirely the wrong measure at the wrong time", warning it could deter motorists from switching to EVs.

As reported by national media this morning, the UK government is set to introduce a levy of 3p per mile driven in an electric vehicle, in a bid to fill a gap in fuel duty revenues caused by the transition away from petrol and diesel.

The Telegraph, BBC and Financial Times have reported that the measure is due to be included in this month’s Budget.

The charge will come in addition to the £195 vehicle excise duty that EV owners are required to pay annually and, according to The Telegraph, it is described by government insiders as “VED-plus”.

The measure is set to be introduced in 2028, pending a public consultation. 

It could raise £1.8 billion a year by the early 2030s as the transition to electric power ramps up. For reference, the Society of Motor Manufacturers and Traders said in April that there were now 1.3 million EVs on the road.

Under the reported proposals, an EV driver who covers 8000 miles in a year would be required to pay £435 in charges annually – £240 in per-mile fees and £195 in VED.

Questions remain over how such a scheme would be enforced.

The reports suggest that EV drivers would be required to estimate and declare their annual mileage when they pay VED. If they exceed this mileage, they will be required to pay for the overage; if they travel fewer miles, they will get credit for the following year. But it remains unclear how mileages will be monitored or audited.