EV pay per mile is counter productive!
Effect of the 3 p/mile EV tax on Government income from EVs
On EV sales
The pay-per-mile charge (3 p per mile for battery EVs, 1.5 p for plug-in hybrids) is forecast to reduce EV sales.
OBR projections:
440,000 fewer EVs sold over 2028–2031 due to the tax.
Other Budget incentives partially offset this, adding 130,000 sales.
Net reduction: ~310,000 EVs over the forecast period.
B. On government income
Revenue from the 3 p/mile charge
Average EV drives ~8,500 miles/year → £255 per EV/year.
If all 310,000 “lost” EVs had existed, total revenue: ~£237 million over 3 years.
Lost VAT and vehicle tax due to fewer EV sales
VAT (20% of average £35,000 EV) × 310,000 cars ≈ £2.17 billion
Vehicle excise duty (VED) ≈ £31 million
Net financial effect:
Revenue from tax: £237 million
Revenue lost due to fewer sales: £2.2 billion
Overall net: ~£1.96 billion loss over three years
Basically if the above is correct then the government will make a loss of £1.96 billion.
Madness
So in simple terms: for every 1 mile you drive and pay 3 p, the government loses about 28 p elsewhere because some EVs aren’t sold.