Electric vehicle (EV) owners will face a new pay-per-mile tax under plans set to be unveiled by Chancellor Rachel Reeves in the Budget later this month.
The Telegraph is reporting that drivers of electric cars will be charged 3p per mile from 2028 under a scheme designed to plug a growing gap in fuel duty revenues as more motorists switch from petrol to electric.
Treasury sources told The Telegraph the move will be framed as one of fairness, since petrol drivers currently pay an average of £600 a year in fuel duty.
The charge – dubbed “VED+” – will be linked to vehicle excise duty, with drivers estimating annual mileage and paying a corresponding fee.
Sir Mel Stride, the Conservative shadow chancellor, said: “If you own it, Labour will tax it. It would be wrong for Rachel Reeves to target commuters and car owners in this way just to help fill a black hole she has created in the public finances.”
The plan is expected to raise £1.8 billion by 2031 and could pave the way for wider adoption of pay-per-mile taxation across all vehicles.
A Treasury spokesperson declined to comment, but Reeves has previously warned that “all will have to contribute” to help repair Britain’s finances.