Modern electric vehicles are transforming the roads with low noise, rapid acceleration and zero exhaust emissions. However, drivers of electric vehicles in the UK will now face a new 3p per mile charge and drivers of hybrid vehicles a 1.5p per mile charge.
In her speech, chancellor of the exchequer Rachel Reeves said: “All cars contribute to the wear and tear on our roads, drivers will taxed on how much they drive not just on the type of car they own.”
This new EV tax would add up to an extra cost of £300 annually, based on a vehicle travelling 10,000 miles per year. The government argues that this tax is needed to compensate for the reduction in fuel duty from the transition to electric vehicles, and because of its budget deficit.
Given that electric vehicles are more expensive than petrol or diesel vehicles and they require further investment for home EV charging stations, it was previously considered important to provide incentives or grants to encourage the move to electric vehicles.
Rachel Reeves announced changes to EV taxes in the budget.
There are three main scenarios that can show the potential effect on the environment.
Scenario 1: the environmental champions
Let’s consider a family that has an EV and likes to do things that are good for the environment. They may prefer to continue using electric vehicles to support net zero and clean air in their cities, despite the tax rise.
The chancellor’s decision would increase the cost of using their EV. But if the monthly increase of running the EV exceeds the cost of public transport, this environmentally conscious family might consider using their car less and using public transport more.
In this way the family will still contribute to the economy with the new tax, but by choosing a more sustainable transport option they will reduce their energy use, as well as the tyre and brake particle pollution their EV creates.
Scenario 2: the financially driven
In another scenario, a financially conscious couple might have bought their EV because they liked driving but wanted to avoid paying so much for petrol, tax and congestion charges.
Alongside the new pay-per-mile tax, congestion charges for EVs are rising. In London, for instance, the 100% cleaner vehicle discount for electric vehicles will be replaced the end of December with a 25% discount for electric cars and 50% for vans until March 2030. This does at least offer some saving over petrol and diesel still.
The cost analysis will depend on many factors. These include purchase cost, vehicle excise duty, road tax, costs of congestion charges and low emissions zones, maintenance costs, mileage per year, style of use, business tax, fuel or electricity costs, depreciation, location of electric charging (home or public), and any other expected additional taxes or related interest rates.
According to research, for an average annual distance of 10,000 miles,