Chancellor Rachel Reeves is expected to unveil a potential new tax for electric vehicle (EV) drivers in the upcoming 26 November Budget.
Speaking to the BBC, a government spokesperson stated, “Fuel duty applies to petrol and diesel vehicles, but there’s no parallel for electric vehicles. We aim for a fairer system for all drivers.”
The sale of new petrol and diesel cars will be prohibited from 2030, mandating that all new cars be electric or hybrid models.
This initiative aligns with the UK government’s commitment to achieving “net zero” emissions by 2050, a legally binding target.
In 2023, domestic transport, encompassing cars, buses, and trains, was the largest emitting sector, accounting for over a quarter of the UK’s emissions.
Ministers have pledged to ban the sale of new petrol and diesel vehicles by 2030.
Consequently, all new cars must be either fully electric or hybrid, incorporating both an internal combustion engine and an electric motor.
UK drivers will have the option to purchase new hybrid vehicles until 2035.
Comparatively, the EU’s ban on new fossil fuel-powered car sales will take effect in 2035.
Currently, there is no direct electric vehicle equivalent to the fuel duty levied on petrol and diesel car drivers.
However, as of April 1, 2025, Vehicle Excise Duty became applicable to EVs for the first time.
For new cars, the first-year payment is £10, increasing to the standard rate of £195 in the second year. Vehicles registered between April 2017 and March 2025 are subject to a £195 charge from the outset.
Electric cars registered after this date, priced above £40,000, are also subject to an annual “luxury car tax” of £425, payable for five years from the second year of taxation.
Ahead of the Budget, the Treasury has reportedly been evaluating whether to consult on a potential “pay-per-mile” tax for EVs starting in 2028.
The Telegraph reported that EV drivers could face a charge of 3p per mile, in addition to existing road taxes, potentially adding £12 to a journey from London to Edinburgh.
The enforcement mechanism for such a scheme remains unclear, with reports suggesting motorists may pay based on self-estimated mileage.
The AA cautioned the government to “tread carefully” to avoid hindering the transition to EVs. Ford expressed concerns that EV taxes could discourage purchases amid waning demand.
In London, electric vehicle drivers will be subject to the congestion charge beginning in 2026.
UK sales of new, fully electric cars have demonstrated consistent growth.
According to the SMMT, the car industry trade association, registrations rose from 29,800 in October 2024 to 36,800 in October 2025.
This figure represents a quarter of all new car registrations, with a target of reaching 80% by 2030.
The second-hand market is also expanding, albeit from a smaller base. SMMT data indicates that approximately 80,600 used electric cars were sold between July and September, accounting for 4% of second-hand sales.
Analysis by ZapMap suggests there are now at least 1.7 million fully electric cars on UK roads, representing approximately 5 per cent of the total.
Cars with combustion engines still constitute the vast majority of vehicles, and will still be driven after 2035.
The government recently introduced a subsidy scheme for new EVs. Grants of up to £3,750 are available for eligible models priced at £37,000 or less.
The scheme aims to facilitate the transition to electric vehicles.
The AA has reported that drivers “frequently cite the upfront costs of new EVs as a barrier to adoption.”
In the second-hand market, Autotrader notes “numerous instances where electric cars are priced equally or lower than comparable petrol models, especially in the three to five-year age range.”
Additionally, approximately 680,800 electric cars are currently leased, according to the British Vehicle and Leasing Association (BVRLA), representing nearly half of all leases.
Regarding running costs, electric charging can be more economical than petrol or diesel, contingent on the charging location.
Home charging, for those with the option, is significantly cheaper, particularly with off-peak tariffs.
Home charging benefits from a 5% VAT rate on domestic energy, compared to the standard 20% rate for public charging.
Prices can vary substantially at public charge points, depending on factors such as charger speed and time of day. Certain apps offer discounted charging rates.
The fastest “Ultra-rapid” public charging may be more expensive per mile than fossil fuels.
Motoring groups suggest that electric cars generally entail lower maintenance costs.
Electric car range and the number of public charge points have improved, yet concerns persist regarding adequate nationwide coverage.
Zapmap data indicates almost 87,000 charge points across the UK, at approximately 44,000 locations, including supermarket car parks and lamppost chargers.
In March, a report by the Public Accounts Committee of MPs noted that motorway availability remains “patchy.”
The report indicated the government is on track to meet the minimum 300,000 points needed by 2030, but emphasized that “too few have been installed outside of the South East and London, which currently host 43% of all charge points.”
The report also raised “concerns regarding the impact on drivers with disabilities, those without access to off-street parking, and disadvantaged groups.”
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