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As countries around the world look to overhaul taxation systems that once drew from fuel levies to fund government revenue, the UK has confirmed distance-based charges for electric and plug-in hybrid vehicles.
The UK Government has announced an overhaul to its road tax system that will see owners of electric vehicles and plug-in hybrids charged a road user fee, based on the distance they travel.
Other changes set to take effect include an increase in the existing fuel duty for the first time since 2010.
The new distance-based tax, officially called the Electric Vehicle Excise Duty (eVED), will see a pay-per-mile road user charge applied from April 2028.
Upon its introduction, eVED will be charged at a rate of 3 pence per mile for EVs and 1.5 pence per mile for PHEVs, or roughly 3.75 cents per kilometre and 1.9 respectively in Australian terms.
The eVED levy is being introduced alongside the existing Vehicle Excise Duty (or VED) road tax that already applies to vehicles in the UK, and is intended to function as a replacement for the fuel duty applied to petrol and diesel fuels.
According to UK government figures, drivers of petrol and diesel vehicles cover the equivalent of 12,875km per year on average, and pay £480 ($AU972) in fuel duty.
The same government data reveals that EV drivers tend to cover a greater annual equivalent distance of around 14,160km per year, resulting in a lower £264 ($AU534) raised via the new distance charge.
The additional tax for plug-in hybrids has been calculated at an average of £120 ($AU243) per year, with the expected part-time fuel use for PHEVs substituting the shortfall in eVED revenue.
By its own admission, the UK’s Office for Budget Responsibility suggests that “the new charge is likely to reduce demand for electric cars, as it increases their lifetime cost.”
Full details of how the distance calculations will be recorded are yet to be announced, however the UK Government has confirmed that vehicle owners will not be required to install distance recording or tracking devices.
Users will likely be required to self-report their annual driving distance.
In Australia, the Victorian Government previously introduced a short-lived road-user charge for plug-in hybrid and electric vehicles.
Photographer: Lisa Maree Williams/Bloomberg via Getty Images.
Alongside the details of the eVED system, the UK Government is also expected to announce a change to fuel duty.
The last increase to fuel duty in the UK came in 2010, when the duty was set at 57.95p ($AU1.17) per litre, although since 2022, a lower rate of 52.95p ($AU1.07) per litre has been collected as a temporary measure introduced to offset high fuel prices impacted by the war in Ukraine.
With an end to the 5p reduction expected to take place, it’s expected that fuel duty may return to the previous 57.95p, and run with an annual increase linked to the Retail Price Index, which the UK measures to index inflation.
Kez Casey migrated from behind spare parts counters to writing about cars over ten years ago. Raised by a family of automotive workers, Kez grew up in workshops and panel shops before making the switch to reviews and road tests for The Motor Report, Drive and CarAdvice.
