London – The UK Treasury is exploring a pay-per-mile tax on electric vehicles (EVs), with early proposals suggesting a rate as low as 3p per mile, according to leaked documents reported by The Times. The move aims to plug a projected £40 billion annual shortfall in fuel duty and vehicle excise duty (VED) as petrol and diesel cars phase out by 2035. But the automotive industry has hit back hard, calling the policy “entirely the wrong measure” at a pivotal moment for EV adoption.
The Society of Motor Manufacturers and Traders (SMMT) warned that taxing mileage risks undermining the government’s own net-zero targets. “Drivers have been incentivized to switch to EVs with the promise of lower running costs,” said SMMT chief Mike Hawes. “Introducing a per-mile charge now—before charging infrastructure is nationwide and battery costs are truly competitive—will stall progress.” The AA echoed the concern, noting that a 3p-per-mile rate would add £300 annually for a typical 10,000-mile motorist, wiping out much of the savings over petrol.
Ministers insist the tax is “future-proofing” transport revenue, with GPS-based tracking floated as the enforcement mechanism. Privacy advocates immediately cried foul, labeling it “state surveillance on wheels.” The RAC called for road pricing to be fair across all vehicles, not just EVs, arguing that singling out early adopters punishes green behavior.
Across the Atlantic, U.S. observers are watching closely. How soon before blue states try the same? California, already piloting a voluntary per-mile program since 2023, could mandate it by 2028 if federal highway funds dry up. Oregon’s 1.9¢-per-mile experiment has enrolled 1,500 drivers; Washington State is drafting similar legislation. With the Highway Trust Fund projected to be insolvent by 2027, cash-strapped Democratic strongholds may see mileage taxes as the least regressive way to fund crumbling roads—especially as EV registrations surge past 15% in the Golden State.
Critics argue the UK’s 3p rate is a Trojan horse. “Start low, then ratchet up,” said one industry insider. “Once the tech is in place, politicians won’t resist inflation-proofing it.” Tesla UK and BMW both warned that premature taxation could shave 20% off projected EV sales through 2030.
For now, the Treasury insists no final decision has been made. But with the Autumn Budget looming, the message to drivers is clear: the era of “free” electric miles may be shorter than advertised.
Spies, how soon before they push for it here?