Drivers in the UK face significant changes as the Labour government prepares to introduce a pay-per-mile vehicle tax, known as VED+, starting November 26. This new system will require electric vehicle (EV) owners to pay 3 pence for every mile driven, potentially enforced through monitoring devices installed in cars.
Rachel Reeves, the Chancellor, is reportedly spearheading this initiative, which aims to create a fairer taxation system for all motorists. Professor ManMohan Sodhi, an expert in Operations and Supply Chain Management at Bayes Business School, supports the tax, noting its rationale. “Fuel duty on petrol and diesel currently generates £24.4 billion for the Government, revenue that would be lost if drivers switch entirely to EVs,” he explained. He also highlighted that heavier EVs contribute more to road wear, justifying additional charges. “Petrol and diesel cars pay about 7p per mile in tax already, so a 3p per mile charge for EVs is not unreasonable.”
However, Professor Sodhi recognized the political sensitivity surrounding the use of black box devices to monitor mileage, which many drivers may find intrusive.
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Melanie Lane, Chief Executive of Pod—one of the UK’s largest EV charging providers—expressed concerns about the new tax proposals. “EV registrations are growing steadily, showing that investments and incentives are effective,” she said. “Introducing a pay-per-mile tax risks discouraging drivers and contradicts government efforts to promote EV adoption. This policy feels disjointed—it rewards with one hand but penalizes with the other, potentially undermining driver confidence at a critical time.”
Responding to these concerns, a Government spokesperson emphasized the need for a tax system that fairly funds road maintenance and public services while continuing support for cleaner vehicles. “We aim to develop a fairer system of motoring taxation that supports electric vehicle ownership through additional measures to make it more convenient and affordable,” the spokesperson added.
As the UK moves towards greener transport solutions, balancing taxation fairness with environmental incentives remains a pressing challenge.