Motoring experts blast Reeves’ new 3p-a-mile electric vehicle tax

The Chancellor confirmed the Treasury's controversial road-pricing plans as she attempts to recover some of the fuel duty revenue lost during Britain's current transition to zero-emission vehicles.

Under the new pay-per-mile levy, EV owners will be charged 3p per mile they drive, on top of a £195-a-year VED rate, which they have paid since April this year.

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Plug-in hybrid (PHEV) cars will also be subject to a 1.5p per mile charge. Both rates will rise annually in line with CPI.

Reeves hopes the tax, which will come into effect in April 2028, will raise a predicted £1.9 billion for the Government's coffers by 2030.

But the motoring world says it is bracing itself for a decline in EV sales, after the OBR predicted the move would "reduce demand for electric cars as it increases their lifetime cost', with an estimated 440,000 fewer EV sold over the next five years.

However, a forecast 320,000 increase in EV sales, driven by incentives like a rise in the Expensive Car Supplement from £40,000 to £50,000, is expected to partially offset the drop.

MPs have struggled for years to find a way of filling the £40 billion black hole created by the switch to EVs and the loss of motoring taxes, including fuel duty.

According to the OBR, the average driver of a battery electric car will be driving 8,500 miles in 2028-2029, and will therefore be charged £255m - roughly half the rate of fuel duty tax paid by petrol and diesel vehicle owners.

The money generated will go towards maintaining the UK's roads and infrastructure, in the same way fuel duty does.

The OBR said the "introduction of the new mileage-based charge on electric cars will offset around one-quarter of the 0.6 per cent of GDP in revenue set to be lost from fuel duty by 2050 due to the transition to electric vehicles".

Drivers will be asked to estimate their annual milage and pay a fee based on their prediction.

If they overestimate, the remaining money will be carried over as credit for next year. But they would be required to top up their payment if they drive further than originally estimated.

Critics fear a large number of drivers will struggle to afford the levy if the Government only charges people once a year.

Howard Cox, Founder of FairFuelUK.com, told the Daily Mail: "Rachel Reeves's 3p Pay per mile on EVs is I fear the thin end of the wedge to make all vehicles, whatever their type of fuel, pay tax as they drive.

"Whilst Fuel Duty and VAT continues to deliver billions to the exchequer, both types of taxation cannot work alongside each other.

It's time Government listens to and consults drivers as to developing a long term road user tax plan thats fair to UK's 37m drivers and the economy."

Steve Gooding, director of the RAC Foundation, added: "By our calculations a 3p per mile charge for EVs is still likely to leave a gap from the annual revenue Chancellors have come to bank on from fuel duty, which means its unsurprising that in parallel the Treasury has looked to increasing the level of fuel duty as a way to cover a shortfall that could otherwise be as much as £2bn per annum by the end of the decade."