TL;DR: A proposed 3p-a-mile tax on electric cars could see rural UK drivers paying nearly four times more than their urban counterparts, according to new analysis. The data suggests this 'postcode lottery' could deter hundreds of thousands of people from buying an EV, potentially undermining the UK's net-zero targets.
New analysis has revealed a stark regional divide in the government's proposed mileage-based tax on electric cars, sparking fears it could penalise rural communities and slow the UK's transition to green transport.
As of recent data, the plan to introduce a 3p-a-mile road charge from 2028 could see drivers in the South West of England paying nearly four times as much as those in London. This significant cost disparity is now at the centre of a debate over fairness and the future of electric vehicle uptake.
The numbers behind the divide
The Treasury projects the new tax will generate approximately £1.1 billion annually by 2028, designed to plug the financial black hole left by dwindling fuel duty revenue. However, the burden of this charge won't be shared equally.
According to the latest figures, a typical London-based EV driver, who travels fewer miles, can expect an annual bill of around £33.09. In stark contrast, a driver in the South West, where longer journeys are a necessity, faces an average cost of £110.25. For those in the most remote rural towns, where public transport is often limited, that figure could climb as high as £156.51 per year.
This emerging financial penalty is one of the key electric vehicle uptake barriers currently being discussed. The Office for Budget Responsibility (OBR) has added its voice to the concerns, estimating that a mileage-based tax could result in 440,000 fewer electric car sales over a five-year period.
A 'postcode lottery' for green motoring
Critics argue that the proposed tax structure creates a 'postcode lottery', effectively punishing drivers for living outside major cities. The analysis, conducted by The Electric Car Scheme, suggests rural motorists are being asked to disproportionately cover the fuel duty revenue loss.
It's a frustrating reality for many. London currently boasts the highest concentration of EVs and the most comprehensive charging infrastructure, yet its residents would pay the least under this new system. This has led to accusations that the policy undermines the UK's own zero-emission vehicle mandate by making the switch less attractive for the 'mass market' drivers needed to hit national targets.
Thom Groot, CEO of The Electric Car Scheme, described the mileage-based tax on electric cars as a potential final straw for prospective buyers. He said “There are still a lot of people in the mass market who are very sceptical about EVs … so anything that gives people a reason not to [buy one] creates yet another boundary.”
Is the EV bonus disappearing?
So, is it still worth making the switch? The government's position is that electric vehicles remain a financially sensible choice. Officials are quick to point out that even with a 3p-a-mile road charge, EV running costs are significantly lower than for petrol cars. For context, the average petrol driver currently pays around £480 per year in fuel duty, meaning an EV would still be roughly 50% cheaper to run on a per-mile basis.
Now, here's the thing: other financial incentives are already being phased out. The exemption for EVs from London's Congestion Charge is ending, and broader UK EV road tax changes are expected in the coming years. This gradual removal of perks is making the financial calculation more complex for households on the fence.
To counter this, the government has highlighted its commitment to supporting the transition, including a £1.3 billion fund for UK electric car grants. These grants can provide up to £3,750 off the price of a new vehicle, which remains a powerful incentive. But as the consultation on the mileage-based tax continues, the debate over regional fairness versus fiscal necessity is only set to intensify. The environmental benefits are clear, but for many, the 'EV bonus' is starting to look a little thin.