The road ahead for electric cars just got a little bit bumpier in the UK. The government announced a new pay-per-mile road tax for drivers of zero and low-emission vehicles, set to begin in April 2028. Part of the latest budget, this is the government’s way to make up for lost money from fuel duty as more people switch from gasoline and diesel cars to EVs.
The new tax will charge drivers based on how many miles they travel. Drivers of battery-powered EVs will pay a tax of 3 pence per mile, while drivers of plug-in hybrids will pay 1.5p per mile. These rates will increase each year to keep up with inflation. For an average electric car driver covering 15,000 miles in the 2028-2029 financial year, the expected cost is around $618. The government claims this figure is roughly half the tax rate that drivers of petrol and diesel cars pay in fuel duty for the same distance.
The new tax plan got a mixed reception from the automotive industry. Ford, for example, said the budget sent “a confusing message” about the government’s goal to push motorists toward electric cars. Groups like the Society of Motor Manufacturers and Traders (SMMT) welcomed the fresh investment for incentives but warned that the per-mile charge would “undermine demand.”
The Renewable Energy Association went further, calling the tax a “knee-jerk” charge. The reason for the pushback is simple: the OBR itself predicts the new charge will result in about 440,000 fewer electric car sales over the next five years because the total cost of owning an EV goes up.
To help soften the blow, the government is also rolling out several benefits and investments. They committed an extra $1.79 billion to extend the Electric Car Grant until 2030, offering subsidies to buyers of new EVs. The government also set aside $275 million for improving the charging infrastructure, a key concern for many potential EV owners.
The threshold for the Vehicle Excise Duty (VED) ‘expensive car supplement’ for electric cars is going up from $55,000 to $69,000, meaning fewer high-end EVs will face the extra $851 yearly tax. The OBR suggests these other measures could help offset the lost sales from the new tax by around 320,000 EVs. But in reality, with an average EV already costing over $69,000, owners clocking in 15,000 miles will end up paying $1,470 in taxes every year for the pleasure of owning a “green” vehicle.
A major sticking point for the new tax is how the government will track mileage. The plan involves checking a vehicle’s odometer during the annual MOT test (a vehicle inspection) or around the car’s first and second registration anniversary for new vehicles. The tax payment will be part of the existing VED system managed by the DVLA.
The Treasury admits that drivers could tamper with their odometers to avoid the full charge and says it is looking for ways to stop this. This raises questions about whether more advanced, and perhaps intrusive, tracking methods will become common practice in the future. For now, the government is holding a consultation to figure out the exact details of how the new scheme will work fairly.
Industry experts also point out that the pay-per-mile system will affect some drivers more than others. For example, those who rely on public charging, which is currently taxed at a higher rate than home charging, will face a heavier tax burden overall. As Delvin Lane, the chief executive of charging company InstaVolt, pointed out, this will mainly affect rural drivers and people with lower incomes who may not have a driveway for home charging.
The ban on new petrol and diesel car sales in 2030 is getting closer, and the government needs to find a balance between collecting taxes for road maintenance and making sure the EV transition stays on track. And it seems they went for the easiest solution – to squeeze more money out of people who are trying to make a difference.
Via
