Experts Warn UK EV Tax Could Cost £4.8bn More Than Raised

Industry experts have warned the UK government that a proposed pay-per-mile tax on electric and hybrid vehicles, set to begin in April 2028, could cost the economy up to 4.8 billion pounds more than it generates in revenue, potentially slowing the shift to electric vehicles.

Chancellor Rachel Reeves announced the electric vehicle excise duty, or eVED, in the November 2025 Budget to recover lost fuel duty as more drivers switch to EVs. Under the plan, pure EV drivers would pay 3 pence per mile, while plug-in hybrid owners would pay 1.5 pence per mile, on top of the standard 200-pound annual vehicle excise duty. The Office for Budget Responsibility estimates the Treasury will raise 1.1 billion pounds in the 2028-29 financial year, increasing to 1.9 billion pounds by 2030-31. For a typical driver covering 8,500 miles annually, this would add about 255 pounds a year.

A coalition of trade associations, including Beama, ChargeUK, EVA England, and the Renewable Energy Association, sent a letter to Exchequer Secretary Dan Tomlinson urging a delay until 2030, when sales of new pure petrol and diesel cars are banned. Their analysis predicts a loss of 630 million pounds in VAT revenue in...