Taxi drivers shifting to electric could each cost Exchequer over £2,000 a year in lost fuel duty

Taxi drivers shifting from diesel to new fully electric vehicles could cost the Exchequer over £2,000 a year in lost fuel duty according to new research.

Analysis by the RAC Foundation shows that when a pure electric car is purchased instead of a diesel car then the Chancellor loses, on average, around £831 each year on fuel duty. For a petrol car that figure drops to £669.

These figures are based on the BMW X5 model and uses data which plots the average mileage of newly registered vehicles. According to the data recorded at the time of the registered vehicle’s MOT an average of 10,377 miles is driven each year.

Taxi vehicles in full-time use can do upwards of 30,000 miles each year ferrying passengers around their cities. There are around 290,000 licensed taxi and private hire vehicles in England according to latest DfT statistics. The cost in lost revenue from the taxi and private industry alone could add up to over £700million each year once all vehicles shift to fully electric vehicles.

The Society of Motor Manufacturers and Traders (SMMT) forecasts that there will be around 175,000 pure battery-electric cars sold in the UK this calendar year.

Steve Gooding, Director of the RAC Foundation, said: “In the face of a big decline in revenue the chancellor could decide to turn off the money taps and start to tax EV drivers rather than subsidise them. For those buying battery-powered cars on the premise of cheap motoring that will be a huge shock.

“Or Mr Sunak might conclude that the hole in his finances is actually rather modest when set against the benefits of saving the planet with the help of green vehicles.”