A new pay-per-mile road tax on electric vehicles (EVs) is set to cost the average driver £240 annually, based on typical mileage of around 8,000 miles per year. These plans were originally unveiled under Sir Keir Starmer and his former Chancellor, Rachel Reeves, and have now been confirmed by the incoming Labor Prime Minister, Andy Burnham.
The government remains committed to implementing this tax from 2028. The charge will be set at 3p per mile for fully electric cars and 1.5p per mile for plug-in hybrids, meaning that the more miles driven, the greater the charge. For example, a driver covering 5,000 miles annually would pay £150, while someone driving 15,000 miles would face a yearly cost of £450.
According to government estimates, the average electric car driver covers approximately 8,900 miles annually, translating to a charge of roughly £267 under the new rates.
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This pay-per-mile system will affect some of the UK’s most popular electric vehicles. The current nine best-selling EV models include the BMW i4 (6,699 registrations), MG 5 EV (7,030), Polestar 2 (7,345), Mini Electric (7,425), and Nissan Leaf (9,178). The Volkswagen ID.3 (9,832) is also among the top sellers. Leading the list are the Kia e-Niro/Niro EV (11,197), Tesla Model 3 (19,071), and Tesla Model Y (35,551).
The announcement comes amid concerns from the automotive industry regarding investment in UK production facilities. Mike Hawes, Chief Executive of the Society of Motor Manufacturers and Traders (SMMT), warned on Thursday that some carmakers with existing UK operations are considering producing new models locally but have so far delayed final investment decisions, awaiting clarity on electric vehicle sales regulations.
“Those with existing UK operations were considering building new models, but had held back so far,” said Mike Hawes, highlighting the cautious approach from the industry as new policies take shape.
The proposed road tax reflects the government’s strategy to adapt taxation as vehicle technologies evolve, ensuring that all drivers contribute fairly to road maintenance and infrastructure funding.