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This article was published on April 30, 2021


EV owners looking at extra costs as UK moves to plug road tax gap

Switching to EVs means less funds for the Treasury

EV owners looking at extra costs as UK moves to plug road tax gap
Ioanna Lykiardopoulou
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Ioanna Lykiardopoulou

Ioanna is a writer at SHIFT. She likes the transition from old to modern, and she's all about shifting perspectives. Ioanna is a writer at SHIFT. She likes the transition from old to modern, and she's all about shifting perspectives.

The UK‘s shift to EVs will come with a heavy price, an expected  £40 billion ($56bn) loss in the Treasury’s funds.

On Wednesday, Greener Transport Solutions, a non-profit group that provides recommendations to central and local government, submitted to MPs a report, aimed at tackling this problem.

Specifically, the report proposed a mandatory per-mile road pricing scheme by 2030, to coincide with the sales ban on internal combustion vehicles.

The organization considers this measure a “fiscal imperative.”

With the electric vehicles being exempt from vehicle excise duty (an emissions based tax) and the expected decrease in fuel demand, the Treasury will loose 28 billion ($39bn) from fuel duty, £6 billion ($8bn) from VAT on fuel,  and £6.5 billion ($9bn) from VED charges.

The rates of the road pricing scheme will be based on distance, vehicle weight, emission, and traffics levels. The distance charge, for instance, is set at 2p (0.03c) per km for cars, 3p (0.04c) per km for vans, and 6p (0.08c) per km for lorries.

The proposed scheme needs to go hand in hand with the provision of incentives to prospect EV buyers, the report claims.

Therefore, it recommends a 33% discount for models up to £35,000 for buyers that voluntary opt for the road charges from 2023, and a £3,000 grant for those who scrap their old vehicle (if more than 10 years old) and switch to an EV instead.


Do EVs excite your electrons? Do ebikes get your wheels spinning? Do self-driving cars get you all charged up? 

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