The UK’s electric vehicle (EV) landscape is bracing for a major shake-up. A leaked fiscal report and ongoing Treasury discussions suggest that the government is preparing to roll out a pay-per-mile EV tax for EVs and hybrids from April 2028, marking one of the most dramatic motoring policy shifts in years. While officials argue the system is necessary to replace declining fuel-duty revenue, manufacturers, drivers, and industry experts warn the move could derail the country’s rapidly evolving EV ecosystem.
What the Proposed EV Tax Looks Like
According to details revealed in the Office for Budget Responsibility’s (OBR) pre-Budget outlook, the upcoming policy would introduce a 3p-per-mile charge for electric cars and 1.5p-per-mile for plug-in hybrids. These rates would escalate annually with inflation.
For context, an EV owner driving 10,000 miles a year could be looking at around £300 in extra costs, while someone covering 8,500 miles would pay roughly £255—still significantly lower than a petrol driver’s fuel duty burden, which currently averages over £530 per year.
Treasury officials defend the concept, pointing out that petrol and diesel motorists contribute heavily through fuel duty, while EV owners currently pay nothing. “We want a balanced system that maintains our roads and public services while still encouraging the shift to low-emission transport,” a spokesperson noted, highlighting an additional £1.3 billion earmarked for EV purchase grants.
Why the Government Says It’s Necessary
As EV adoption accelerates, traditional fuel-duty revenue—one of the government’s most reliable sources of income—is shrinking. Experts have long warned that without a new model, funding for roads, infrastructure, and public transport will suffer.
Steve Gooding of the RAC Foundation describes the policy as “inevitable,” noting that EVs still contribute to congestion, tyre-related particulates, and road wear. Countries like New Zealand, Iceland, and U.S. states such as Oregon already use similar systems, often relying on odometer readings or connected-car data to calculate mileage.
In the UK, mileage verification could easily slot into regular servicing appointments and the annual MOT once a vehicle is three years old.
Industry Leaders Fear the Timing Is All Wrong
Despite the logic behind the EV tax, automakers and EV advocates warn the measure could undo years of progress.
The Society of Motor Manufacturers and Traders (SMMT) argues the policy risks “choking EV demand at a critical moment,” as manufacturers struggle to meet Zero Emission Vehicle (ZEV) mandate targets. The OBR report reinforces this concern, estimating the EV tax could result in 440,000 fewer EV sales by 2030 — though future incentives might claw back around 130,000 of those losses.
AA president Edmund King echoes the caution, stressing that the government must strike a careful balance to avoid stifling the transition to EVs, particularly as the ban on new petrol and diesel cars looms in 2030.
Drivers Worry About Rising Costs and Declining Incentives
Public reaction has been mixed but increasingly tense. Many drivers feel blindsided by the proposal because there has been little public consultation, and the cost of running an EV—once considered a major advantage—continues to inch upward.
Howard Cox of FairFuelUK highlights that EV owners will already start paying £195 Vehicle Excise Duty (VED) in 2025. Adding another mileage-based levy, he argues, risks punishing early adopters.
Charging-network CEO Delvin Lane warns that those who rely on public chargers—often rural residents and lower-income drivers—could be hit the hardest. These groups already pay more due to higher VAT rates on public charging versus home charging.
Will Pay-Per-Mile EV Tax Eventually Apply to Petrol and Diesel Cars?
Some experts believe this is only the beginning. Advocates of universal road pricing say that a per-mile model could actually be fairer, especially for low-income households who often drive older, less efficient petrol cars and therefore pay proportionally more tax per mile.
Professor Karen Lucas of Manchester University suggests that if the system replaced existing taxes entirely, it could eliminate long-standing inequalities in how the UK funds its roads.
But the political risk is enormous. Previous attempts at road pricing have triggered massive public backlash — including a historic petition signed by 1.8 million people that forced the government to scrap an earlier proposal.
A Crucial Crossroads for the UK’s EV Future
Supporters say road pricing is unavoidable. Critics say the new levy threatens the momentum of electrification at the exact moment when affordability, infrastructure, and consumer confidence need strengthening.
Even the OBR acknowledges uncertainty, noting that total revenue could fall by £200 million by 2030 because the EV tax itself might reduce how much people drive — and how many EVs they buy.
With the Chancellor expected to formally outline the plan in the autumn Budget, the debate is intensifying. What feels clear, however, is that the UK is approaching a pivotal inflexion point: whether to treat EVs as an investment in a cleaner future, or just another source of taxation.
For more information about the Pay-Per-Mile EV Tax, visit BBC.
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Hey, I’m Badal! I’m super passionate about cars—especially electric ones. Whether it’s EVs, electric trucks, bikes, or anything with a battery and wheels, I’m all in. I love writing blogs and articles that break things down for fellow enthusiasts and curious readers alike. Hope you enjoy the ride as much as I do! Enjoyed reading? You can buy me a coffee on PayPal ☕ → paypal.me/BadalBanjare
