The British skipped fuel tax by switching to an electric car. The Government’s solution: create another tax

The British Government recently announced a new tax for electric vehicles in which drivers would pay per distance traveled (miles), with the intention of it coming into force in April 2028. The measure, which is included in this documenthas drawn criticism from many citizens and experts, and comes at a key moment, as the United Kingdom plans to ban the sale of new gasoline and diesel cars in 2030. Its public coffers are losing revenue from fuel taxes while the adoption of electric vehicles grows.

How the system is planned so far. Electric car drivers will pay 3p per mile traveled (about 3.4 euro cents), while plug-in hybrids will pay 1.5 pence. The calculation will be made through an annual mileage estimate that drivers will declare when renewing their road tax, and will subsequently be verified during the technical inspection of the vehicle.

According to the Government, an average electric car driver who travels 13,680 kilometers a year you will pay about 255 pounds additional (approximately 295 euros).

Why this change matters. Just like share According to The Telegraph, Finance Minister Rachel Reeves justifies the measure as necessary to compensate for the drop in fuel tax revenue. According to Dan Tomlinson, MP and Secretary of the Treasury, if no action is taken, by 2030 one in five drivers will not pay fuel tax while others will continue to contribute an average of £480 annually.

According to the media, the Office of Budget Responsibility predicts that this new tax could reduce sales of electric vehicles by 440,000 units in the next five years.

Industry reactions. Manufacturers such as Ford and the British manufacturers’ association SMMT have harshly criticized the measure. Ian Plummer, Commercial Director at Autotrader, declared that “we need more carrot and less stick if we are serious about the electric transition.” From Ford they pointed out that the budget sends “a mixed message” about the government’s goal of driving the shift to electric vehicles.

Implementation problems. The system presents several practical challenges. Drivers will have to estimate their annual mileage without it necessarily coinciding with the date of their MOT (the equivalent of the MOT in the UK), which complicates the calculation. New cars, which do not require inspection for the first three years, will need additional checks. Furthermore, the Government recognize which could increase odometer fraud, a practice which, according to The Telegraph, already affects 2.3% of British vehicles.

A controversial issue. As the current regulations are stated, drivers who use their vehicles outside the United Kingdom They would also pay for those milesdespite not using British roads. The Government justifies this decision by arguing that the percentage of drivers traveling abroad is small, although it recognizes that it will especially affect residents of Northern Ireland, as they frequently cross into the Republic of Ireland.

The impact on the pocket. Although the Government insist With the rate equal to half of what gasoline and diesel drivers pay, many electric vehicle owners are already starting to worry. Stephen Walton, a driver who bought an electric car in 2023, counted to the BBC that “it will be my first and last electric vehicle because there are no tax advantages for electric car drivers.”

A unexpected advantage for China. Analysts such as Sam Goodman, from the China Strategic Risks Institute, warn that the new tax could encourage British consumers to opt for cheaper Chinese models such as the BYD Dolphin Surfwhich sells for 18,650 pounds compared to the more than 26,000 that some eligible European alternatives cost. During the third quarter of 2025, Chinese models They already represented 11.8% of the British new passenger car market, according to Schmidt Automotive Research.

What’s coming now? The Government has opened a consultation period to define the final details of the system before 2028. It also announced an additional investment of 1.3 billion pounds in aid for the purchase of electric vehicles, although only four models currently qualify for the maximum subsidy of 3,750 pounds, the cheapest being the Ford Puma Gen-E (£26,245 applying subsidies).

The Office of Budget Responsibility esteem The new tax will raise £1.1bn in its first year and £1.9bn by 2030-31, although the actual figure will depend on how many Britons decide to buy electric cars in the coming years.

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