Hybrid drivers across the country face being hit with double tax under Rachel Reeves’s plans to introduce a pay-per-mile electric levy – which will also apply to petrol and diesel cars.
Plug-in hybrid vehicles, which have both a small battery and a conventional engine, will be slapped with a 1.5p-a-mile charge under the Electric Vehicle Excise Duty (eVED).
The tax, set to come in in 2028, was announced at the Chancellor’s budget last week. The plan will see drivers of battery-only cars pay 3p a mile.
This will mean Britain’s millions of hybrid drivers, who will have to pay for miles driven using both their battery power and conventional fuel, will be taxed again on top of the fuel duty.
Sales of plug-in hybrids have skyrocketed in recent years, accounting for one in 10 of all cars sold.
This year, 190,240 plug-in hybrids have been sold – an increase of 37 per cent on 2024, according to The Society of Motor Manufacturers and Traders (SMMT).
Chief executive of the SMMT Mike Hawes described any form of double tax as ‘punitive’ and predicts it will ‘dissuade’ buyers.
He told The Times some drivers are ‘understandably anxious, especially those with concerns over charging availability or those who regularly do long journeys’.
Mr Hawes also explained how hybrids are a ‘crucial step’ towards full EV, so slapping them with a double tax for fuel and eVED will deter many from investing in this ‘beneficial technology’.
Auto Express polling found 32 per cent of people believe the new tax was ‘poorly timed’ and would slow the transition to electric vehicles.
And 23 per cent said it was ‘unfair’ because EV drivers already pay road tax and VAT.
Analysis by research group New AutoMotive found similar taxes launched in Iceland and New Zealand resulted in ‘a severe and immediate collapse’ in market share for electric vehicles.
In Iceland, a 5p-a-mile tax and the withdrawal of subsidies for EVs at the start of last year saw a fall in market share from around 40 per cent in 2023 to just 13 per cent in 2024.
New Zealand introduced a 2p-a-mile tax and withdrew subsidies in early 2024 which saw the market share for EVs fall from 18 per cent to 6 per cent.
The Office for Budget Responsibility, the fiscal watchdog, estimated that the pay-per-mile scheme in the UK will mean that 120,000 fewer cars will be sold by 2030.
President of the AA Edmund King said: ‘They are not talking about introducing it until 2028 so why are we talking about it now? They could easily have waited another 12 months before raising it so there’s no premature damage to uptake.’
