According to a report by BBC News, the Government is preparing to introduce a pay-per-mile tax for electric vehicle (EV) owners, replacing the current system of fuel duty loss as drivers switch away from petrol and diesel. The article states that Treasury officials are exploring a two-tier mileage charge — potentially around 3p per mile for EVs and 1.5p per mile for plugin hybrids — to plug the long-term shortfall in motoring tax revenues.
DM News Commentary
This latest development is another major shift for EV drivers — especially those in the private hire and taxi industry, who often adopted electric vehicles because they were promoted as the cheaper and greener long-term option.
A mileage-based charge has been expected for years, but the timing will frustrate many. Drivers were encouraged to go electric, only to face a wave of new costs afterwards:
• Rising EV insurance premiums,
• Vehicle Excise Duty (car tax) returning for EVs from 2025,
• Clean air zone/congestion pressures
• and now a pay-per-mile tax on top.
For taxi and private hire drivers, this could have the biggest impact. They cover significantly higher daily mileage than regular motorists, meaning even small per-mile charges add up quickly. Hopefully policymakers consider a reduction or waiver for professional drivers, because they are likely to be the group hit hardest despite being early adopters of cleaner vehicles.
That said, even with the proposed 3p and 1.5p per-mile bands, EVs still remain considerably cheaper to run than diesel — especially when charged overnight at home. But the overall direction of travel does leave many feeling frustrated: first the public were pushed to go electric, then additional charges arrive once owners are already financially committed.
This change will be watched closely across the taxi and private hire trade, particularly as PHV operators weigh up long-term vehicle choices and charging strategies.
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