The Chancellor's pay-per-mile tax on electric cars will create a stark 'postcode penalty', hammering drivers in rural and poorer areas, we can reveal.

From April 2028, Rachel Reeves plans to charge electric vehicle (EV) owners 3p for every mile driven. 

Plug-in hybrids (PHEVs) - capable of up to 70 miles on electric power - will face a 1.5p-per-mile levy on top of fuel duty under her electric vehicle excise duty (eVED) raid.

The policy is designed to plug a growing hole in Treasury finances as fuel duty receipts fall alongside petrol and diesel sales.

The Office for Budget Responsibility (OBR) puts that shortfall at around £1billion a year - a gap Reeves now intends to close by taxing EV use for the first time.

But analysis by the British Vehicle Rental and Leasing Association (BVRLA) warns the burden of her tax sting will weigh heaviest on those least able to absorb it.

EV drivers in areas with poor public transport - often with lower incomes - will face the steepest bills, with some paying up to £267 on top of the £200-a-year standard VED rate, it said.

With higher insurance premiums and rising charging costs already biting, the added levy risks piling further pressure on households switching to electric.

BVRLA chief executive Toby Poston said the policy 'may appear fair on paper' - but in reality 'falls hardest on the drivers least able to avoid it'.

To calculate the eVED cost for each area, the BVRLA examined average annual mileage using MOT data for every parliamentary constituency. 

It then collected EV and PHEV ownership data for those constituencies and estimated how many more electrified cars will be on the road by 1 April 2028 using the current adoption rate. 

A total eVED cost per constituency was then divided by the number of drivers it will impact, generating an average pay-per-mile cost for both EV and PHEV owners in all 632 locations. 

On average, EV drivers can expect an annual pay-per-mile charge of £218, while PHEV owners will need to fork out an average of £109 a year, the study says. 

To understand which parts of the country will be hit hardest, we have extrapolated the latest child poverty statistics for each constituency - sourced from the House of Commons Library - to generate a deprivation rating (with the lower the rating being the worst) for each. 

And the data shows that motorists living in poorer rural constituencies will feel the eVED squeeze most. 

This is not simply because household incomes are generally lower but due to fewer public transport options than in urban areas, which means annual mileage is typically much higher.

The parts of the UK where eVED will sting most 

Drivers in Scotland will feel the pinch in particular, the report finds.

Some 18 of the 50 highest-mileage constituencies are north of the border, with Stirling and Strathallan (6,827 miles), Dumfriesshire, Clydesdale and Tweeddale (6,823 miles), and Caithness, Sutherland and Easter Ross (6,711 miles) topping the table.

This means annual eVED costs of between £201 and £205 for EV drivers, and just over £100 for PHEV owners.

In contrast, London's ten least-affected constituencies all have median mileages below 4,000 miles per year (£120 for EV eVED), as a result of greater access to public transport, cycling infrastructure and lower car dependency.

But some drivers in parts of England will also be stung by significant additional annual tax bills.

Motorists in Hayes & Harlington, Ely & East Cambridgeshire, Doncaster East and South West Norfolk also face some of the highest costs, all coming in at more than £250 a year.

And some of the most deprived constituencies in the country will see EV drivers hit with eVED charges above £200.

This includes Birmingham Ladywood, which has the highest child poverty rate of all 632 constituencies at 53.8 per cent.

The cost of running an EV will also increase by more than £200 for drivers in Bradford West, which ranks third overall for child poverty rates across England, Scotland and Wales.

In stark comparison, drivers in the Cities of London & Westminster - one of the most affluent parts of the country - are looking at eVED levies of just £116 per year.

The BVRLA said the findings from its analysis expose an 'EV postcode penalty'.

It added: 'A system structurally weighted against drivers least able to reduce their mileage and least likely to have access to public transport, charging infrastructure or the household income that would make EV ownership straightforward.'

While some will argue the system operates in the same way as fuel duty, with those covering the highest mileage being burdened heaviest, fuel consumption is also linked to the type of vehicle - with gas-guzzling expensive 4X4s a lot thirstier than cheap small hatchbacks. 

'At 3p per mile - the proposed pay-per-mile eVED rate - annual bills will vary enormously, depending not on how much a driver earns, or how much they pollute, but simply on where they live,' the study concluded.

Toby Poston, chief executive of the BVRLA, said: 'People who live in less connected areas don't drive more because they want to; they drive more because they have no choice.

'Their towns don't have the luxury of networks of trains, tubes and cycle lanes that make car-free living possible in cities.

'Under these proposals, a driver in Caithness or rural Norfolk will pay three times the annual road tax of someone in central London - not because of how much they earn or how much they pollute, but simply because of where they live. That is not a fair system.'

The geography of the data is 'damning', added Tanya Sinclair, chief executive at Electric Vehicles UK.

'Rural drivers, fewer chargers, longer journeys, highest bills - that is the opposite of a fair transition.

'And this week the government quietly confirmed it won't raise fuel duty either. So petrol gets cheaper in real terms while EV drivers are punished. If there is a coherent strategy here, it is not visible from the outside.'

Reeves' eVED system has also been criticised by campaign groups for levying the same financial toll regardless of the value of the vehicle.

It means anyone who buys Ferrari's controversial new £500,000 Luce EV will pay the same 3p per mile rate as a driver who has bought a 10-year-old Nissan Leaf for £2,500.

The Treasury expects eVED to raise £1.1 billion in its first year (2028/29), with revenue projected to grow to £1.9 billion by 2030/31.

However, when the scheme was announced in last year's Autumn Budget, the OBR predicted its introduction will 'reduce demand for electric cars as it increases their lifetime cost', with an estimated 440,000 fewer EV sales over the next five years.

The Treasury responded, saying the OBR's calculation was incorrect and that it will be closer to a 120,000 EV shortfall between now and the end of the decade.

It too is expected to be offset by a forecast 130,000 increase in electric vehicle sales due to other EV budget incentives - including an expansion of the Electric Car Grant and increasing the VED Expensive Car Supplement threshold to £50,000.

*Analysis is based on DVLA vehicle licensing statistics, BVRLA fleet and mileage data, and 2024 UK parliamentary constituency boundaries. Total tax projections to 2028 apply an eVED rate of 3p per mile to mean annual mileage figures and estimated EV fleet growth (BEV and PHEV combined). Per-driver figures are calculated by dividing projected EV tax by projected EV fleet size. Median mileage figures cited for individual constituency comparisons use median rather than mean to avoid distortion from high-mileage commercial fleet vehicles. Deprivation rating out of 632 constituencies (from 1 the worst to 632 to best) based on percentage of children living in poverty in 2024/25.