Electric vans will be ruled out of a proposed EV pay-per-mile tax but plug-in hybrids will be chargeable, reports claim.

The plans for the new EV levy hit the headlines last week and further details have now emerged in a report from The Times.

The new tax, first disclosed in a report in the Daily Telegraph and since confirmed by a senior industry insider according to What Car?, would see EV drivers charged 3p per mile on top of other road taxes if it goes ahead.

The Times has now said electric vans are understood to be not “in scope” for the planned scheme, but plug-in hybrid drivers, who already pay duty on the fuel they use, will pay the per-mile levy at a discounted rate.

The national newspaper added that government officials are understood to have subsequently held briefings with major UK vehicle manufacturers to confirm the plans.

And The Times said the Chancellor is expected to unveil a major package to “support the market” alongside the new levy at the Budget.

According to reports, drivers would have to estimate their own mileages and pay the tax upfront, rather than using electronic tracking. Drivers would receive credit if mileage was under the estimate or would pay a ‘top-up’ charge if they exceeded the predicted usage. Mileage submissions would then be checked against the car’s odometer at the annual MOT, although this poses additional problems as new cars in England, Scotland and Wales only require their first MOT by the third anniversary of its registration, rising to four years in Northern Ireland.

The new tax would help fill the impending black hole in revenues from fuel duty, as drivers switch from petrol to electric vehicles, and is seen as a fair way for EV motorists to pay their way.

A government spokesperson said: “Fuel duty covers petrol and diesel, but there’s no equivalent for electric vehicles. We want a fairer system for all drivers.”

But many in the automotive and EV sectors have said it’s the wrong time for such a move, with many petrol/diesel drivers still unwilling to go electric, and that the new tax could “derail the UK’s electric momentum” amid existing concerns for EV sales targets under the ZEV mandate and the requirement for EV drivers to now pay road tax since April 2025.

Others have pointed to a lack of joined-up policy, after the Government launched its Electric Car Grant just a matter of months ago to drive EV take-up and amid continued action to accelerate charge point rollout and remove barriers.

Michael Shaw, CEO of Aegis Energy, said any move to exempt vans from the upcoming EV pay-per-mile tax was vital to help drive fleet confidence in electrification. Data published by Arval last month indicates fleet operators continue to face challenges with everyday use of electric vans.

“The decarbonisation of the UK’s commercial transport sector is vital to the country’s economic growth and environmental progress,” said Shaw. “The Government’s focus should remain on policies that enable fleet operators to make this transition, rather than those that risk slowing it down.

“It’s therefore welcome news that electric vans will be exempt from the proposed pay-per-mile EV tax in the upcoming Autumn Budget. With commercial transport responsible for around 10% of the UK’s total emissions, the move to zero-emission fleets is both urgent and complex. Any additional tax burden could have discouraged businesses from investing in cleaner vehicles at a time when confidence is critical.”

Shaw also stressed that that the rollout of the scheme was crucial to its success.

“If the Treasury implements the new tax regime in a way that is transparent, fair and efficient, it will usher in a modern, mature approach to the domestic EV market, ensuring it remains stable and fiscally sensible for both drivers and the Government.

“It is vital that fleets, drivers and manufacturers are included in this process, and that the Government continues to prioritise the UK’s transition to cleaner energy transport, as many of its previous policies have achieved.”