As the automotive landscape shifts towards sustainability, electric vehicle (EV) taxation is gaining attention. Currently, EV drivers do not pay an equivalent fuel duty imposed on petrol and diesel vehicles. The Treasury is considering a new strategy: a “pay-per-mile” tax for electric vehicles, potentially starting in 2028.
Upcoming Changes to Electric Vehicle Taxation
A government spokesperson emphasized the need for a fairer tax system that encompasses all vehicle types. Reports suggest that EV drivers might face a rate of 3p per mile. This could translate to an additional £12 for a journey from London to Edinburgh. However, the enforcement of this system remains uncertain, as it may rely on self-reporting by motorists regarding their expected mileage.
Current Tax Structure for Electric Vehicles
The transition to a comprehensive EV tax framework has already begun. Notable changes include:
- Vehicle Excise Duty (VED): Starting April 1, 2025, EVs will first incur a £10 charge in the first year, followed by a standard £195 from the second year.
- Luxury Car Tax: Electric cars registered after April 2025, costing over £40,000, will face an additional £425 per year for five years from the second tax iteration.
- Congestion Charge: In London, EV drivers will be subject to the congestion charge starting in 2026.
The AA has cautioned the government about these potential tax changes, urging caution to prevent hindering the shift to electric vehicles. Meanwhile, industry players, such as Ford, express concern that taxes could deter consumers from adopting electric vehicles during a period of declining demand.
The proposed taxation models and existing regulations signal a pivotal moment in the adoption of electric vehicles. As the timeline for banning new petrol and diesel cars progresses, understanding these developments will be crucial for prospective EV owners navigating the evolving landscape.
