Drivers of electric vehicles (EVs) may encounter a new tax in the upcoming Budget. Reports indicate that government discussions have addressed the possibility of a new levy on EVs as the Chancellor seeks additional revenue. A government spokesperson noted, “Fuel duty covers petrol and diesel, but there’s no equivalent for electric vehicles. We want a fairer system for all drivers.”
Recent articles suggest that the Budget could introduce a pay-per-mile charge for EV drivers. Estimates indicate a potential charge of 3p per mile, which could tally up to an additional £12 for a trip from London to Edinburgh. Hybrid vehicle drivers would also be subject to charges, though at a reduced rate. According to the proposal, owners would project their annual road usage and pay accordingly, with credits available for underestimating mileage but top-up fees for exceeding their estimates.
The transition from petrol and diesel vehicles to electric options has resulted in a shortfall in government revenues, which are already under pressure. Since April, EVs have no longer been exempt from vehicle excise duty, a change made in the 2022 Budget. The government emphasized the need for a tax system that equitably funds roads and public services while still supporting the transition to electric vehicles. They pointed to £4 billion in previously allocated support, including grants to reduce upfront costs of eligible vehicles.
Concerns have arisen regarding a “tax gap” due to the decreasing number of petrol and diesel vehicles on the road, leading to greater attention on pay-per-mile systems. However, some, including AA president Edmund King, have expressed caution. He stressed the importance of balancing revenue needs with promoting the transition to EVs and called for clarity regarding the proposed tax’s fairness.
Source: https://www.bbc.com/news/articles/c0mxgzpj1dvo?at_medium=RSS&at_campaign=rss