Navigating the EV Road Charge: Clarity on the Change, Confidence in Your Strategy.
If you are a company director enjoying the glow of driving an electric company car, saving the planet, saving tax and silently gliding past petrol stations, the government may have a surprise for you. The rumoured 3p per mile EV road charge might be heading our way.
Before you panic, let’s take a breath and look at what is actually happening
- The current situation: a golden age of EV perks
The UK government has spent years nudging everyone toward electric cars. First the ban on new petrol and diesel cars was set for 2035. Then moved to 2030. Then moved back to 2035. Classic.
Company directors have enjoyed several generous incentives that made electric company cars a very attractive option. These include:
- Low Benefit in Kind (BiK) rates that are far gentler than the ones slapped onto petrol and diesel drivers.
- 100 percent first year allowances until 2026, letting companies deduct the full cost of a qualifying EV in year one.
- Low running costs when charging at home, often around 8p per mile which makes petrol look like liquid gold.
In short, if you are a director with an electric car, life has been wonderfully tax efficient.
- Enter the proposed 3p per mile charge
The Treasury is now eyeing a new per mile charge for EVs to compensate for the drop in fuel duty. Around 3p per mile is what the rumour mill suggests. Consultations hint it could appear around 2028, although government timelines are famously flexible. It might arrive next week or sometime after humanity colonises Mars.
The official narrative is that this is about fairness. Translation: EV drivers have been getting away with too much fun and too little taxation.
- Does this ruin the EV advantages for directors?
Not entirely, no. It certainly takes a bit of the shine off but the maths still works in your favour.
Charging at home costs roughly 8p per mile. Add the proposed 3p road levy and you get about 11p per mile. Petrol and diesel drivers routinely pay something more like 13 to 17p per mile. So you are still winning, just without the same level of smugness.
The bigger issue is psychological. When perks keep being chipped away, the whole arrangement feels less like a clever tax move and more like something the government is slowly trying to take away.
- What can you do as a director?
Here are some practical steps you can take, delivered the BB way.
- Consider buying your EV sooner rather than later so you can still enjoy 100 percent first year allowances.
- Keep mileage records like an absolute hero. You will thank yourself later.
- Use HMRC advisory rates correctly. They now distinguish between home charging and public charging, and mixing these up can create nasty taxable surprises.
- Charge at home whenever possible. It is cheaper and you avoid those public chargers that only work if the moon is in the right phase.
- Revisit the classic buy versus lease decision with fresh eyes.
- Avoid any daring anti-tax manoeuvres. HMRC always notices, usually at the worst possible time.
- A simple example
Imagine you drive 10,000 miles a year and mostly charge at home.
- 10,000 miles at 8p per mile is 800 pounds.
- Add the 3p levy and you get another 300 pounds.
- Total cost is 1,100 pounds.
A petrol car doing the same miles could easily cost 1,400 to 1,700 pounds. So the EV is still ahead.
- What to look for in the Budget
Keep an eye on:
- How the government plans to collect the charge.
- Whether business miles will be exempt.
- How company cars will be treated.
- Whether any reliefs or caps will soften the blow.
- The actual start date, which in true British fashion may or may not have any relation to the one they announce.
- Final Thoughts from Brit Balance & Co.
The proposed 3p charge is a recalibration, not a revolution. For the discerning company director, the EV remains a highly tax-efficient and cost-effective choice when managed with foresight.
While this change doesn’t undermine the core strategy, it does highlight the importance of proactive planning. The landscape for electric vehicles is maturing, and the initial, exceptionally generous perks are naturally evolving.
At Brit Balance, we’re already analysing how these potential changes will integrate with your long-term financial and tax planning. If this has sparked any questions about your current company car arrangement or future strategy, we’re here to provide the clarity and insight you need to navigate the road ahead with confidence.