Electric vans are set to escape a new pay-per-mile tax on electric vehicles (EVs), while plug-in hybrids will still face charges under the government’s proposed motoring levy.
Reports from The Times suggest that electric vans will not be “in scope” for the 3p-per-mile charge, which Chancellor Rachel Reeves is expected to confirm in her upcoming Budget.
However, plug-in hybrid vehicles (PHEVs) like the Ford Ranger PHEV will be included, albeit at a discounted rate. That would mean their drivers could end up paying both fuel duty and the new EV charge.
The proposed scheme, first revealed by The Daily Telegraph would require EV owners to estimate their annual mileage and pay the levy upfront, with adjustments made later based on the vehicle’s odometer readings. The government is reportedly considering a system where drivers submit mileage figures online, potentially supported by photographic evidence from the car’s dashboard.
Mileage checks would be verified during the car’s annual MOT, but industry insiders have raised concerns about how the system would work for new vehicles that do not require an MOT for the first three years (four years in Northern Ireland). Critics have described the proposal as a “bureaucratic nightmare”.
The Treasury is pressing ahead with the pay-per-mile plan as fuel duty revenues continue to decline with the rise of electric motoring. It’s estimated that the new levy will cost the average EV driver around £250 per year, and affect up to six million motorists when introduced in 2028.
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’ve invested £4bn in support — including grants to cut upfront costs by up to £3,750 per eligible vehicle.”
According to The Times, the Chancellor is also expected to announce a “major package to support the market” alongside the new levy, which could include further consumer incentives or assistance for manufacturers.
Reeves is reportedly set to argue that EV drivers currently save an average of £600 a year in fuel duty compared with petrol and diesel motorists, and that the new charge represents a fair contribution to road and infrastructure funding.
The exemption for vans will be welcomed by businesses and fleet operators who rely on electric models such as the Ford E-Transit and Vauxhall Vivaro Electric, but carmakers remain frustrated by what they see as an overly complex and burdensome system.
