There is little chance that a planned pay-per-mile charging regime for electric and plug-in hybrid cars from 2028 would be extended to coaches and buses with the same driveline technology, a lawyer has suggested.
Freeths Partner and Head of Transport Michael Bray acknowledges that the 3p per mile charge for electric cars, and a levy of half that for plug-in hybrid cars, has nothing definite in policy announced so far to prevent it from capturing other vehicle types later.
However, he believes that given how the Vehicle Excise Duty mechanism is favourable for coaches and buses compared to some other categories, it is thus politically unlikely that those vehicles with electric power will fall within a per-mile charging regime.
Should it happen, Mr Bray’s opinion is that any charging level for electric coaches and buses would be set at a much lower level than for electric cars. “It also may not be universally applied, given existing support for local services such as BSOG,” the legal specialist adds.
Against that, he suggests that the future levy on electric and plug-in hybrid cars will have no material effect on their usage despite some suggestions that it could encourage public transport ridership.
Electric cars come with an average list price of around £46,000; even when combined with rising insurance premiums and electricity costs, their adoption in the UK continues to rise. With an average annual mileage of 7,100, the pay-per-mile tax will generate revenue for the Treasury of £213 per electric car.
Per-mile charges for electric and plug-in hybrid cars were announced at the November Budget by Chancellor Rachel Reeves. At the same time, she confirmed that the 5ppl temporary fuel duty reduction will stay until September 2026 ahead of gradual removal.
Mr Bray believes that an extension of the freeze on duty will continue to benefit coach and bus operators, although nor will it incentivise car drivers to switch modes, he suggests.
Some calls have been made for coach and bus to be partially or fully exempted from fuel duty. Mr Bray speculates that if such a course was followed by ministers, it is unlikely that the full benefit would be passed to passengers, “but it would provide some welcome relief to operators already… on very tight profit margins.”
