Older drivers, particularly those over 70, could face an additional annual tax charge of around £50 under new rules set to take effect in April 2028. Electric car drivers will be required to pay 3p per mile, while hybrid motorists will pay 1.5p per mile.
How the charge is calculated
Drivers over the age of 70 cover an average of 1,665 miles per year, which translates to a total charge of £49.95 over a 12-month period. The Treasury has said mileage will be checked annually around the time the MOT is due, while new cars will be checked around the first and second anniversary of their registration.
The payment will be integrated into the existing Vehicle Excise Duty System, operated by the DVLA, with readings based on in-vehicle odometers.
Concerns over tampering
The Government has acknowledged that the system could open the door to tampering, or “clocking.” Officials recognise that the tax “may increase the likelihood of motorists choosing to clock their vehicles” and are looking into mitigation measures, according to the BBC.
The Office for Budget Responsibility (OBR) estimated that the change could generate £1.1 billion over its first financial year, growing to £1.9 billion by 2030/31. The OBR report added that the yield would depend on the number of electric cars purchased over the next five years, making exact projections “uncertain.”
Scope and impact
The charge will apply to all electric vehicles registered in the UK, regardless of where they are driven in the world, while vehicles registered abroad but driven in the UK will be exempt. It comes ahead of a planned ban on the sale of new petrol and diesel cars from 2030, with some new hybrid cars allowed to be sold until 2035, including several models that cannot be plugged in.
The OBR warned that the planned tax may discourage Brits from buying electric vehicles, however. It said the new levy was “likely to reduce demand for electric cars as it increases their lifetime cost.” The independent economic forecaster recommended manufacturers respond by “lowering prices or reducing sales of non-electric vehicles” to meet the mandate.
Market reaction
Sales of new electric cars in the UK increased for the 10th consecutive month in September, with a record number of models on the road, according to the Society of Motor Manufacturers and Traders (SMMT). Mike Hawes, chief executive of the SMMT, said high fuel prices were “undoubtedly giving more customers reason to consider going electric,” but added that uptake “remains behind mandated targets.”
“The industry's commitment is clear, with billions of pounds of investment in new models, new technology and incentives,” he said. “[But] whilst flexibilities help, the UK still has the world's toughest targets and highest energy costs.”
