Drivers could have to pay hundreds of pounds a year extra with a new car tax. The Government is reportedly looking at bringing in a 3p per mile levy on all electric vehicles in the Autumn Budget. 

Currently people with petrol and diesel cars pay fuel duty when filling up their cars, while electric vehicle drivers have been exempt from such charges. Motoring experts at Auto Express, calculated how much this could add to people’s bills.

Editor Paul Barker said: “According to the latest data from Carwow Leasey, the average annual mileage for an EV is 9,900 miles for a consumer and 11,380 miles for a business vehicle. If the Chancellor were to go ahead with the 3p-per-mile tax on EVs, it would cost the average EV owner nearly £300 a year (£297) – and this is on top of the removal of other incentives, such as the EV exemption on Vehicle Excise Duty.”

From the start of April 2025, electric vehicles are no longer exempt from Vehicle Excise Duty (VED), commonly known as road tax. Mr Barker warned the costs could be even higher for drivers who use an EV for business purposes.

He said: “For business users, the cost rises to almost £350 a year (£341.40), which, on top of the company car tax exemption rules becoming less and less attractive, just adds another deterrent for business EVs, and it is business sales that are currently driving market growth. At a time when EV uptake is critical to meeting emissions targets, increasing the cost of ownership risks slowing the transition to electric and undermining the progress already being made.”

He also warned that there are other areas where EVs need to be improved. Mr Barker said: “If EV taxes have to rise – and it still feels a bit early with sales lagging behind targeted levels – then addressing the high cost of using public chargers is vital. Rather than boosting general Treasury coffers, it would help maintain the momentum and balance the negativity of increasing the cost of this still-fledgling technology.”

Research by consultancy Stonehaven found seven in 10 people think EV owners should pay at least some tax for their driving. Almost half of those surveyed wanted revenues from these taxes to be used to lower the charging costs faced by EV drivers.

Michael Dnes, Stonehaven’s head of transport policy, said: “This polling shows the public are open to a fair deal on EV taxes. But making that deal fair will take some work. Right now, there are big differences in how easy it is to go electric, and the system favours people who own a house with a driveway.