Fri Nov 07 07:13:42 UTC 2025: Summary:

The British government is considering a new tax on electric vehicles (EVs) to compensate for declining fuel duty revenue as more drivers switch to EVs. The proposed tax, reportedly three pence per mile, could generate £1.8 billion annually by the early 2030s but has drawn criticism from the motor industry, who fear it will deter consumers from adopting EVs and undermine the industry’s ability to meet zero-emission vehicle targets. Finance Minister Rachel Reeves is under pressure to balance the budget without stifling economic growth, making difficult decisions about taxes and spending.

News Article:

UK Mulls New Mileage Tax on Electric Vehicles, Sparking Industry Concerns

London – November 7, 2025 – The British government is reportedly considering a new tax on electric vehicles (EVs) to offset declining revenue from fuel duty, as announced Thursday, November 7, 2025. The proposal, detailed in a Daily Telegraph report, suggests a three-pence-per-mile levy on EVs, potentially costing drivers an average of £250 annually.

According to a government spokesperson, the tax aims to create a fairer system for all drivers, as fuel duty currently only applies to petrol and diesel vehicles. The scheme, if implemented after consultation in 2028, is projected to generate £1.8 billion annually by the early 2030s.

The move has been met with strong opposition from the Society of Motor Manufacturers and Traders (SMMT), the UK’s motor industry trade association. They argue that introducing such a tax could discourage consumers from switching to EVs and undermine efforts to meet zero-emission vehicle targets. The SMMT noted that approximately one in four vehicles sold in the UK is fully electric.

Finance Minister Rachel Reeves is facing mounting pressure to balance the national budget amid faltering economic growth. The Office for Budget Responsibility estimates that fuel taxes will bring in £24.4 billion in 2025/2026, representing two per cent of government revenue. The proposed EV tax is one potential solution to address the long-term decline in fuel tax revenue.

The upcoming Budget, scheduled for November 26th, is expected to reveal more details about the government’s plans. The Finance Minister has not ruled out increasing other major taxes.

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