Question to the HM Treasury:

To ask the Chancellor of the Exchequer, with reference to the Autumn Budget 2025, what comparative analysis she has undertaken on the impact of the uptake of EVs of the introduction of pay-per-mile schemes in other jurisdictions including Iceland and New Zealand.

As announced at Budget 2025, the Government is introducing Electric Vehicle Excise Duty (eVED) from April 2028, a new mileage charge for electric and plug-in hybrid cars, recognising that electric vehicles (EVs) contribute to congestion and wear and tear on the roads but pay no equivalent to fuel duty.

The Government considered the wider EV take-up landscape from examples in other countries. The impact of the introduction of similar taxes in other countries is not directly comparable, as in most international examples, the announcement coincided with the reduction or removal of government support for consumers to buy EVs. In contrast, the UK government has taken action to ensure that driving an electric vehicle is an attractive choice for consumers, and rather than reducing up-front incentives for EVs, 80% of eVED revenue from the first three years is being reinvested to extend support for EVs and the auto manufacturing industry.

In addition, the eVED rate for electric cars (3 pence per mile) will be set at half the fuel duty rate paid by the average petrol/diesel car driver, which is substantially lower than the rates set for schemes in New Zealand and Iceland (equivalent of more than 5 pence per mile).