Pay-per-mile charging is the right long-term goal, but giving plug-in-hybrids another tax break is unjustifiable
Budget road transport facts at a glance
New electric vehicle excise duty: 3p per mile for BEV and 1.5p for PHEVs from April 2028
Extension of 5p fuel duty freeze until September 2026, then will undergo a staggered increase back to March 22 levels by March 2027
£2 billion to support the shift to electric vehicles, including 10 years of 100% business rates relief for eligible chargepoints and EV-only forecourts.
The Chancellor’s announcement to introduce a pay-per-mile tax for electric vehicles is a sensible long term choice. It is a decision that reflects the need for a fair and sustainable approach to road use as traditional fuel duty revenues decline as electrical vehicles become more prominent. However, charging polluting plug-in hybrid vehicles (PHEVs) less than zero emission electric, especially when their real-world emissions are proven to be five times higher than official figures, is deeply flawed and risks undermining the UK’s electric transition.
Moving towards a pay-per-mile system is the right long-term goal. But it’s outrageous that the Government has chosen to hand plug-in hybrids yet another tax break as part of its new scheme. Evidence shows PHEVs are fast becoming another dieselgate-style scandal: they deliver little emission savings compared to petrol or diesel cars and already benefit from generous VED discounts. If the Government is serious about creating a sustainable and fair pay-per-mile policy, PHEVs must be charged in line with their real-world emissions, not given rates at half the amount of genuinely zero-emission vehicles. Anna Krajinska, T&E UK Director.
As well as making charging cheaper, finally unfreezing fuel duty is welcome given that oil prices now back down to before the Ukraine war. It sends the right signal for drivers to go electric. However, the Government missed a huge opportunity to make polluters pay fairly and raise vital revenue by introducing a Large Vehicle Levy on oversized SUVs to reflect their outsized road wear, emissions, and safety impact. This could have raised almost £2 billion annually, which could have funded the extension of the EV purchase grants announced in this budget. The UK currently has one of the lowest tax rates in Europe on large SUVs.
The Zero Emission Vehicle (ZEV) mandate is already pushing the UK toward cleaner, greener and more affordable transport. As the Government reshapes the vehicle excise duty system, it’s essential that reforms are fair, reflect real-world emissions, and do not reward cars that pollute more or cost drivers more to run than their fully electric counterparts.
