UK Chancellor Proposes Per-Mile Charge for Electric Vehicles to Offset Fuel Tax Losses

Chancellor Rachel Reeves is set to introduce a 3p-per-mile charge for electric vehicle (EV) drivers, a move expected to generate £1.8 billion annually by the early 2030s. The proposal, likely to be included in the November 26 Budget, aims to address a £20bn–£30bn fiscal shortfall caused by declining fuel tax revenues. EV owners WOULD pay an average of £250 ($326) more per year, compared to the £600 ($784) currently paid by petrol and diesel drivers.

Hybrid vehicles will face lower per-mile fees than zero-emission cars, though the plan excludes electronic tracking. The Treasury has remained silent on whether vans and light commercial vehicles will be included. Despite the new levy, officials emphasize continued support for EV adoption to align with the UK’s net-zero goals. "Fuel duty covers petrol and diesel, but there’s no equivalent for electric vehicles," a government representative noted. "We seek a fairer system while backing the transition."