electric vehicles three pence per mile, while plug-in hybrid vehicles will pay 1.5 pence. This regulation aims to replace declining fuel tax revenues as more drivers switch to electric power.
The UK has approved mileage-based charging for private vehicles for the first time. This decision marks a significant change in the country’s road financing.
Reeves confirmed that the new tax will apply to all electric and plug-in hybrid vehicles registered in the UK from April 2028. The rate will increase depending on inflation starting from 2029. Minibuses, buses, heavy vehicles and motorcycles will initially remain outside the system.
Official documents state that the system will rely on annual odometer readings rather than telematics or GPS tracking. Drivers will estimate their mileage each year and pay at the beginning of the cycle. They will then report the actual mileage at the end of the year. This figure will be verified during MOT tests or, for new vehicles, at a new annual check. Payments will be reconciled once the actual distance is known.
Reeves said Britain wants drivers to contribute “not just based on the type of vehicle they own, but based on how much they drive.”
The Treasury expects the new tax to generate £1.1 billion in revenue between 2028-2029. This figure is expected to rise to 1.9 billion pounds between 2030-2031. This will help close the growing gap in fuel tax revenues as gasoline and diesel use declines.
Automobile Magazine – English
