Rural Drivers Face Heavier Burden Under New Electric Vehicle Tax
Electric vehicle (EV) owners in the UK are bracing for a significant shift in how they contribute to road maintenance. From April 2028, a new mileage-based tax will be implemented, aiming to offset the loss of fuel duty revenue as more drivers switch to electric cars. However, analysis reveals a stark regional disparity, with rural drivers set to pay considerably more than their urban counterparts.
The 3p-Per-Mile Levy: A Breakdown
Announced in the autumn budget, the new system will charge EV drivers 3p per mile driven, while plug-in hybrid drivers will pay 1.5p per mile. The government estimates this will raise £1.1 billion annually. The Treasury is currently consulting on the details of the scheme, with feedback being gathered until mid-March.
Regional Disparities: South West vs. London
The impact of the tax won’t be felt equally across the country. According to research by The Electric Car Scheme, drivers in the South West of England could pay nearly four times as much as those in London. Specifically, drivers in the South West are expected to pay an extra £110.25 per year, while those in London will pay just £33.09. The East Midlands follows closely with an estimated £105.09 annual increase.
This disparity stems from higher average mileages driven in rural areas. Residents of smaller towns and villages near cities face an average annual cost of £156.51, compared to £76.02 for those in urban areas.
Impact on EV Adoption
Critics warn that the new tax could hinder the growth of EV adoption, particularly among those who haven’t already made the switch. Thom Groot, CEO of The Electric Car Scheme, suggests the tax could discourage potential buyers, especially those still skeptical about EVs. The Office for Budget Responsibility estimates the tax could reduce EV sales by approximately 440,000 over five years.
Despite the new tax, EVs remain a financially attractive option. The government recently announced a £1.3 billion boost to the electric car grant, offering up to £3,750 off the price of a new EV. EVs still offer significant savings on fuel costs, with a typical petrol or diesel driver currently paying around £600 per year in fuel duty.
Concerns Over Mileage Accuracy
The scheme relies on annual mileage readings, typically taken during the MOT test or registration anniversary. However, officials acknowledge the potential for “clocking” – the illegal tampering of odometers to reduce reported mileage. The Treasury is exploring ways to mitigate this risk.
Fuel Duty Decline and the Require for New Revenue
The introduction of the mileage-based tax is driven by the declining revenue from fuel duty. Currently, fuel duty raises £24 billion annually, but this figure is falling as more drivers switch to electric vehicles, down from £27.5 billion in 2019-20.
Frequently Asked Questions
What is eVED?
eVED stands for Electric Vehicle Excise Duty. It’s a new mileage-based tax for electric vehicles coming into effect in April 2028.
How much will the tax be?
EV drivers will pay 3p per mile, while plug-in hybrid drivers will pay 1.5p per mile.
Why is the tax different depending on where you live?
The tax is based on mileage driven, and average mileages vary significantly between regions, with rural areas generally having higher mileages.
Will this tax discourage people from buying EVs?
Some experts believe it could, particularly for those who are already hesitant about switching to electric vehicles.
What is the government doing to address concerns about mileage tampering?
The government acknowledges the risk of mileage tampering and is currently exploring ways to mitigate it.
Is there still a financial benefit to owning an EV?
Yes, despite the new tax, EVs still offer significant savings on fuel costs and benefit from government grants.
Did you recognize? The new tax aims to ensure all drivers contribute to road maintenance, regardless of their vehicle’s power source.
Pro Tip: Consider your annual mileage when evaluating the total cost of EV ownership, factoring in the new tax.
Stay informed about the latest developments in EV taxation and policy. Explore our other articles on electric vehicles and sustainable transportation for more insights.
