From April 2028, drivers of electric vehicles will be taxed 3p per mile, and drivers of plug-in hybrids 1.5p per mile in new measures announced by Chancellor
Most of the autumn Budget detailed today by Rachel Reeves MP, Chancellor of the Exchequer, was focused on personal taxation, wages, pensions and benefits – though one announcement is directly tech-related.
Photo by Michael Fousert / Unsplash
From April 2028, there will be a new tax on electric vehicles (EVs) and hybrids. Drivers of EVs will pay 3p per mile and drivers of plug-in hybrids will pay 1.5p per mile. This is still, ‘half the fuel duty rate paid by drivers of petrol cars’ says a report by the Office for Budget Responsibility (OBR) – which was accidentally published a little ahead of the Chancellor formally announcing the Budget).
The government estimates that the new tax will bring in some £1.1bn during the financial year 2028-29. The tax will then rise in step with inflation and is expected to bring in between £1.7bn and £1.9bn in 2030-31. Those last figures are ‘uncertain’ says the OBR report, or vary by £200m, as they depend on how many people actually buy EVs and hybrids over the next five years. One factor in that is, er, this new tax.
‘This new charge is likely to reduce demand for electric cars as it increases their lifetime cost,’ explains the OBR report. Yet at the same time, a ban on new cars powered solely by either petrol or diesel comes into effect in 2030, and by 2035 all new cars and vans must be 100% zero emissions. So there is pull in both directions and exactly how things will balance out is difficult to tell.
The government anticipates that the new tax will mean 440,000 fewer sales of EVs, though it also thinks that other government initiatives may offset about a quarter of that loss. We will have to see, though that uncertainty is, of course, no comfort to the industry.
Edmund King, President of the AA, says: ‘The Budget has put drivers at a fork in the road with the chancellor announcing major tax proposals for EV owners. Drivers fully understand that the government needs to get the balance right between raising cash for roads investment, whilst ensuring it doesn’t slow down the transition to electric cars in order to meet environmental targets.’
In other tech-related news, the Budget also included details of a new levy on the planned Sizewell C nuclear power station, to be built on the Suffolk coast.
In related news:
Focus on tech won £4.6bn of inward investment in Wales last year
Public sector workers need training and upskilling in digital – new research
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