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Electric cars Chancellor considers pay-per-mile tax as petrol revenues fall
The Guardian
|November 07, 2025
Rachel Reeves is considering using this month’s budget to announce plans for a pay-per-mile tax for electric vehicles worth an extra £250 a year on average.
The proposals could mean EV drivers pay a charge of 3p a mile on top of other road taxes to offset falling revenue from petrol and diesel cars as drivers switch to greener options.
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."
The chancellor is expected to argue that the new levy would be fairer as drivers of petrol or diesel cars currently pay on average £600 a year in fuel duty (EV owners joined them in paying road tax in April this year).
The extra revenue would also help Reeves plug a financial hole of between £20bn and £30bn by the end of the parliament.
This story is from the November 07, 2025 edition of The Guardian.
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