Drivers of electric cars will be requested to go to MOT centres annually to have their mileage checked, even if their vehicle does not require an inspection, under changes announced by Rachel Reeves.
The new pay-per-mile scheme for EVs could become “chaotic and messy”, with complicated administration and harder second-hand sales, experts said.
The chancellor announced on Wednesday that EV drivers would be liable for a 3p-per-mile tax on miles driven from 2028. Drivers of plug-in hybrid vehicles would pay 1.5p.
Experts warned that there was a risk the system could become overcomplicated with onerous rules for drivers. The Office for Budget Responsibility said that 120,000 fewer EVs would be sold because of the measures.
Under the plans, drivers of new EVs will be required to visit MOT centres to have their mileage verified in the first two years of ownership, despite the car not requiring an inspection.
Drivers will be required to buy their miles for the year at the same time they tax their car, making an estimation of how much they will drive. The following year, when renewing their tax, they will either pay a top-up or claim a rebate for unused miles.
The miles will be attached to the car, which means that if a driver sells their vehicle during the year, they would have to sell the miles with it.
Dan Neidle, a tax expert, said the risk of a buyer becoming liable for someone else’s mileage “could be messy”. He said drivers would have to take into account whether the car they were buying had a “surplus” or “deficit” of EV duty.
“This doesn’t feel great to me,” he said. “[It] would be better to let owners or dealers make a ‘catch-up’ payment at the point of sale so buyers are getting a vehicle excise duty-‘clean’ car.”
The Treasury is consulting on the measures. The checks by an MOT centre would be required to ensure that drivers are not cheating their mileage in the first two years of ownership. Mileage is already recorded at a car’s MOT, but these only kick in on the third anniversary of registration.
The pay-per-mile scheme is designed to plug the hole being left by falling fuel duty receipts as more people drive electric cars.
A source said the proposals were the “most complicated, bureaucratic and civil service” they had seen. “The fuel duty issue is not new. Surely they could have thought up a better plan.”
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Reeves defended the plans on Thursday and said it would not be “difficult” for drivers to calculate how much they needed to pay. The chancellor was quizzed on some of the practicalities of the levy but said “everyone can check the mileage on their car, it’s not a difficult thing to do”.
Tanya Sinclair, chief executive of Electric Vehicles UK, a trade body, said: “It’s good to see the pay-per-mile scheme is under consultation, because in its current form the proposal simply isn’t ready.
“Too many practical questions remain unanswered, from how drivers will use it day-to-day to how the government plans to deliver such a major shift in motor taxation. Until those details are clear, the system risks feeling chaotic and drivers are left in the dark. The UK’s motor taxation regime clearly needs fundamental reform but using EV drivers as the test bed isn’t the way to do it.”
The consultation document says the government “recognises that the non-alignment” of when people tax their vehicle and when they get its MOT means “there will be scope for some motorists to declare inaccurate mileage readings without this being immediately apparent”.
It adds: “By under-declaring mileage, motorists run the risk of their mileage being subject to an increased rate in future years. Moreover, since the odometer reading will be reflected in the sale price when the vehicle changes ownership, and an official mileage reading is required when a vehicle is scrapped, under-declaration will ultimately always be identified.”
It also warns that there is a risk of car clocking, when drivers hack into their vehicle system to reduce the mileage. About 2.3 per cent of cars show signs of clocking in the UK.