How much rumoured new EV tax could cost drivers every year

EV car owners are holding their breath ahead of the autumn budget, which could see a new £250 per year fee introduced.

Consumers and industries across the board are bracing for the Chancellor’s budget later this month, and rumours are swirling over which taxes will rise to meet the ‘non-negotiable’ targets.

Top contenders are possible changes to stamp duty, pension,

Petrol and diesel vehicle drivers currently pay for fuel duty when they fill up, which is expected to raise around £24.4 billion for the Treasury coffers this year.

But with the government keen to phase out the sale of petrol and diesel guzzling vehicles from 2030, it is going to need to find another source of revenue instead of the fuel duty, which motoring groups described as a ‘cash-cow.’

Rachel Reeves is reportedly drafting plans to introduce a 3p per mile tax for EVs, according to the Daily Telegraph.

It would cost EV owners on average £250 each year if the plan were rolled out in 2028 following a consultation.

If the 3p charge per mile was introduced, journeys would cost £12 between London and Edinburgh, £5 between Cambridge and Bristol, and £2

Up to 11 million UK motorists could have an electric car by the start of the new decade, while more than one million people own one already.

A government spokesperson said: ‘Fuel duty covers petrol and diesel, but there’s no equivalent for electric vehicles.

‘We want a fairer system for all drivers whilst backing the transition to electric vehicles, which is why we have invested £4 billion in support, including grants to cut upfront costs by up to £3,750 per eligible vehicle.

Just as it is right to seek a tax system that fairly funds roads, infrastructure and public services, we will look at further support measures to make owning electric vehicles more convenient and more affordable.’

However, campaigners have said a government needs to be careful not to hamper the EV transition.

Edmund King, the AA president, acknowledged that the government faces losing fuel duty money, but it should ‘tread carefully,’ adding that the details of the plans will reveal whether the plans could be a ‘poll tax on wheels.’

Ginny Buckley, the chief executive of Electrifying.com, said: ‘Drivers are being encouraged to go electric, then hit with the threat of new taxes.

‘You can’t drive the EV transition with one foot on the accelerator and the other on the brake.’

The RAC Foundation’s Steve Gooding called the rumoured move a ‘cash-cow’ coming to an end.

He added: ‘If the Chancellor is tempted to go down the route of introducing a distance charge for EV drivers but still encourage EV take-up, then she needs to look at how to cut the cost of public charging for the millions of people who don’t have the option to charge their cars at home.’

The cost of driving an EV

Driving an EV is by no means free at the moment, although fuel costs tend to be generally lower.

Since April, EV owners have been liable to pay vehicle road tax (VED), which they were exempt from before.

In 2025, it is £195 for a year.

Those who charge their EV car at home will have to factor in the increase in their electricity bill. The cost of charging varies between commercial providers at charging points and depends on the charging speed.

Then there is car insurance and maintenance, which tends to be slightly cheaper compared to traditional engine cars because EVs have fewer parts, the RAC said.

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