A potential new car tax being considered by the government could add approximately £300 per year to the bills of average electric vehicle (EV) owners. This proposed levy of 3p per mile would apply to EVs, which have previously been exempt from fuel duty paid by petrol and diesel car drivers.
The estimated annual cost for an average consumer EV driver is calculated to be £297, based on an average annual mileage of 9,900 miles. This charge would be in addition to the removal of other EV incentives, such as the exemption from Vehicle Excise Duty (VED), which also began in April 2025.
For individuals using EVs for business purposes, the financial impact could be higher, potentially reaching around £341.40 annually. Experts warn that this increased cost, combined with less attractive company car tax exemptions, could deter business EV adoption, which is currently a key driver of market growth and essential for meeting emissions targets.
Public opinion research suggests that a majority of people believe EV owners should contribute to taxation for their driving, with many favouring that revenue be used to reduce public charging costs. However, concerns remain about the fairness of such taxes given the current disparities in charging accessibility and cost, particularly for those without home charging facilities.
