A new tax structure targeting electric and hybrid vehicle owners has been confirmed in a recently leaked report from the Office for Budget Responsibility (OBR). Effective from April 2028, the proposed road charge will impose a fee of 3 pence per mile for electric car drivers and 1.5 pence per mile for plug-in hybrid drivers. The UK government anticipates generating approximately £1.4 billion through this initiative, which is intended to partially offset the decline in fuel duty revenues as more drivers transition to electric vehicles.
The OBR’s document outlines the fiscal outlook ahead of the upcoming UK Budget. The report highlights that these rates will increase annually in line with inflation, impacting drivers across the country. For instance, an electric vehicle owner driving 8,500 miles in the financial year 2028-29 is expected to incur a cost of around £255. This amount represents about half of what petrol and diesel drivers currently pay in fuel tax.
Government’s Strategy and Industry Reactions
The government aims to strike a balance between generating necessary funds for road maintenance and supporting the transition to electric vehicles. A statement from the OBR acknowledged the leak and confirmed an investigation is underway.
Edmund King, the president of the AA, commented on the situation, stating, “The Budget has put drivers at a fork in the road with the chancellor announcing major tax proposals for EV owners.” He emphasized that while the government needs to secure funding for road investments, it is crucial to avoid hindering the transition to electric vehicles, which is essential for meeting environmental targets.
The introduction of this tax marks a significant shift in the UK’s approach to transportation and sustainability. As electric vehicle ownership continues to rise, the government is focusing on ensuring that all road users contribute fairly to the upkeep of the country’s infrastructure.
The implications of this new tax will likely be felt by both current and prospective electric vehicle owners. As the date approaches, many will be assessing how these changes might influence their decisions regarding vehicle purchases and usage.
In summary, the UK’s planned implementation of a pay-per-mile tax for electric and hybrid vehicles signifies a pivotal moment in the evolving landscape of transportation taxation. As this policy unfolds, it will be essential for stakeholders to navigate the challenges and opportunities that arise in the transition to a more sustainable future.
