The UK government’s plan to introduce a 3p per-mile tax on electric vehicles starting in 2028 has raised alarm among industry experts and environmental advocates. While aimed at closing the tax gap between petrol and electric cars, this policy risks deterring drivers from transitioning to cleaner transportation, potentially undermining progress toward net zero goals.
Chancellor Rachel Reeves recently backed the pay-per-mile tax plan, which is projected to cost an average electric vehicle driver about £267 annually, based on typical mileage of 9,000 miles per year, according to Department for Transport data. This shift could erode one of the main incentives for buying electric: significantly lower running costs compared to petrol and diesel vehicles.
A YouGov survey reveals that while 55% of prospective car buyers are considering petrol models, only 37% are leaning toward electric vehicles. This disparity signals hesitancy among consumers, which experts fear will be exacerbated by the new tax.
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John Wilmot, CEO of leasing platform LeaseLoco.com, warns that “a pay-per-mile tax risks eliminating the cost advantage of electric vehicles, causing drivers to think twice before making the switch.” He highlights that mixed government messaging, limited charging infrastructure, and rising expenses already create uncertainty. “Removing the running cost benefit could stall the momentum toward greener cars,” Wilmot explains.
Electric vehicles currently average about 8,900 miles annually, and the proposed tax would generate roughly £267 per vehicle, according to official figures. Though interest in electric leasing remains strong, Wilmot stresses that inconsistent policies may shake consumer confidence, slowing adoption rates. “Drivers seek clarity and stability in costs before committing,” he adds.
As the UK pushes toward environmental targets, balancing fair taxation with incentives to embrace electric mobility remains a critical challenge. The introduction of a mileage-based tax on EV drivers sparks a crucial debate on how best to encourage sustainable transport while ensuring revenue for road maintenance.