Electric van drivers look set to avoid the government’s incoming pay-per-mile tax on zero-emission vehicles, according to a report in The TimesExternal link image. The scheme, expected to be confirmed in the Budget later this month, would see car and plug-in hybrid drivers charged a few pence for every mile driven — but vans are said to be “out of scope.”

That could make a big difference to thousands of businesses that rely on light commercial vehicles. The Treasury’s planned 3p-per-mile levy, designed to replace lost fuel-duty revenue as the country moves away from petrol and diesel, will instead target private motorists and plug-in hybrids when it’s expected to come into force in 2028.

Pay-per-mile?

The Treasury is investigating introducing a pay-per-mile charge for electric vehicles in 2028, when as many as six million drivers are expected to be behind the wheel of EVs. The levy is expected to cost an average electric car driver around £250 a year.

Chancellor Rachel Reeves is expected to argue that the move is about fairness. Electric vehicles currently avoid paying fuel duty, saving an average of £600 a year compared to petrol or diesel models. The Treasury’s view is that everyone using the roads should contribute equally to maintaining them.

The system being developed sounds, to put it mildly, cumbersome. EV owners would be asked to log in to a government portal and record their annual mileage, potentially uploading photographs of their odometer readings as evidence. Those readings would then be cross-checked against MoT records, although nobody seems quite sure how this will work for new vehicles that don’t need an MoT for their first three years on the road.

Vans out of scope

Electric vans are not “in scope” for the pay-per-mile scheme, which means that LCV drivers will escape the new levy altogether.

It’s a distinction that might reflect the government’s nervousness about hammering small businesses. For delivery firms, tradespeople and fleet operators already juggling higher purchase costs, limited range, and patchy charging infrastructure, a new mileage tax could have been the final straw.

There’s no guarantee that any reprieve will last. Once the digital infrastructure is in place to collect mileage data, it would be relatively simple to include commercial vehicles in the future, particularly if fuel-duty revenues continue to fall faster than expected.

Electric vans to avoid pay-per-mile charging

The wider automotive industry has reacted with frustration. Andy Palmer, former Nissan COO when the Leaf was introduced, warned that taxing EVs too soon could derail the government’s zero-emission sales mandate.

“If the cost of buying and running an EV increases compared to the alternative combustion engine models, then volume will reduce,” Palmer told The Times. “The industry is fighting to achieve a 28% market share [16% for electric vans] in 2025 under the ZEV mandate. If the current price equation changes and it negatively affects the current trajectory of sales, then that mandate will need to change.”

Others were blunter. Robert Forrester, chief executive of Vertu Motors, described the scheme as a “bureaucratic nightmare” that risks putting “another nail in the coffin of the new EV market.”

While exempting vans from the charge could provide a short-term boost to sales, the fact that the government could introduce the charges down the line is likely to impact confidence. With SMMT figures showing electric van registrations at just 8.4% of the market this year — barely half the government’s targeted 16% — even a hint of additional taxation could make hesitant operators delay switching.

The big question now is how long electric vans can remain outside the scheme. Once the government begins charging private EV drivers, the Treasury will have little incentive to leave business users untouched. Fuel duty raises around £25 billion a year; as that figure falls, policymakers will be hunting for ways to plug the gap.

Phil Huff
Latest posts by Phil Huff (see all)
Published on