Motoring groups criticised the new tax levied on electric and hybrid vehicles announced in the Budget, which is expected to affect 1.7 million UK motorists from 2028.
The new pay-per-mile road charge will be set at 3 pence per mile for electric vehicles and 1.5 pence for plug-in hybrids, meaning that drivers of these vehicles together will contribute an additional £45 for every 1,000 miles.
The Government’s move will “slow down the transition to electric vehicles”, according to Simon Williams, Head of Policy at UK motoring services organisation RAC. Williams noted that EV uptake has already reduced fuel duty revenue. “With fuel duty revenue set to decline as more EVs come on to the road, this is one lever the Chancellor clearly feels she can pull to keep the money coming in.”
The Office for Budget Responsibility said the new levy was introduced to help manage fiscal risks and to offset almost a quarter of the 0.6 per cent of GDP projected to be lost in fuel duty by 2050, as more people switch from petrol and diesel to electric and hybrid vehicles.
The Society of Motor Manufacturers and Traders (SMMT) sharply criticised the new charge, with chief executive Mike Hawes calling it the “wrong measure at the wrong time”, particularly as the automative industry is already under intense pressure to achieve ambitious net-zero emission targets.
The Government also allocated £1.3 billion to the UK Electric Car Grant and extended the scheme until 2030, maintaining discounts of up to £3,750 for eligible vehicles.
Hawes said: “Changes to the Vehicle Excise Duty (VED) expensive car supplement are welcome, as is the additional £1.3 billion funding for the Electric Car Grant and support for charging infrastructure. These will help but will not offset the impact of introducing a new electric-Vehicle Excise Duty – the wrong measure at the wrong time.”
