A new tax system targeting certain drivers based on their annual mileage is set to be introduced, government minister Rachel Reeves has confirmed. The pay-per-mile charge will apply specifically to owners of electric vehicles (EVs) and plug-in hybrids, marking a shift in how road tax revenue is collected.
Starting April 2028, drivers of eligible vehicles will be charged either 3p or 1.5p per mile, depending on their car type. For example, an electric vehicle owner driving 10,000 miles a year can expect an additional £300 charge annually, paid alongside the existing vehicle excise duty.
This new mileage-based tax aims to create a fairer system by aligning EV drivers' payments more closely with road usage. Petrol and diesel motorists already contribute based on fuel consumption, so the government argues it is equitable for EV and plug-in hybrid drivers to pay according to distance travelled.
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However, the announcement has raised concerns among industry experts and motorists that this could discourage the shift towards electric vehicles. Simon England, founder of ALA Insurance, highlighted the challenge: “Financial incentives for electric cars are fading just as the 2030 ban on internal combustion engine vehicles approaches. If EV drivers face equal or higher costs compared to traditional petrol and diesel drivers, many may hesitate to switch.”
Treasury Minister Dan Tomlinson emphasized the government’s rationale: “From April 2028, electric vehicle owners will pay a mileage charge alongside their existing vehicle excise duty, ensuring a fair contribution towards road maintenance.”
As the UK transitions toward electric transport, drivers will need to factor in these additional costs when considering their next vehicle choice.