As speculation grows that the Chancellor will announce plans to charge vehicle excise duty for electric vehicles this week, a new survey finds motorists would be more in favour of road-use pricing.

Chancellor Jeremy Hunt is now widely expected to outline plans to target electric cars in the Autumn Statement

Chancellor Jeremy Hunt is now widely expected to outline plans to target electric cars in the Autumn Statement on 17 November, levying vehicle excise duty (VED) on zero-emission cars and vans that are currently exempt.

The move would form part of efforts to plug a growing black hole in vehicle-related income from both VED and fuel duty and will become increasingly important in the run up to the 2030 ICE ban. A forecast from the Office for Budget Responsibility indicates that fuel duty and VED revenue will fall to £2.1bn by 2026-27, compared to the estimated £35bn that is currently raised.

Currently, emission-free vehicles are exempt from paying first-year VED and the £155-165 annual rate for subsequent years. They’re also absolved from the £335 premium supplement for vehicles costing more than £40,000.

In December 2020, the Treasury’s Net Zero Review Interim Report said the Government would need to consider how to offset these lost tax revenues and the Transport Select Committee opened an inquiry.  It’s now widely believed that EV owners could have to pay car tax by 2025 under new plans from the Chancellor.

But a new survey of 500 motorists conducted by Venson Automotive Solutions found that 23% believe a road-use pricing scheme, such as those successfully introduced in Sweden, Germany and Singapore, would be a better option. Such schemes – which were most favoured as a revenue alternative by survey respondents – levy direct charges for the use of roads. These include road tolls, distance or time-based fees, congestion charges and charges designed to discourage the use of certain classes of vehicle, fuel sources or more polluting vehicles.

In comparison, only 18% of respondents supported the introduction of VED on EVs.

Less popular revenue-making options include a ‘pay-as-you-drive’ scheme, using telematics to monitor driver behaviour and speed, which was backed by 9% of respondents, while a tax based purely on miles driven, utilising data collected annually from an MOT test, gained support by 8% of motorists.

Meanwhile, 13% said they believe that a specific EV ‘business use’ charge for company car and van drivers should be introduced. And 28% of those surveyed said they were unsure what the best solution would be.

Alison Bell, operations director at Venson Automotive Solutions, said: “Around one in six new cars bought in Britain this year are fully electric. Whatever decision is made to address the shortfall in motoring tax revenue, the Government won’t want to stall the uptake of EVs. Any solution introduced needs to be a fair and cost-effective solution for both business and leisure drivers, with enough incentive to ensure the UK’s electric transition continues at pace.”