The UK government is set to introduce a controversial pay-per-mile tax that will impact drivers based on their annual mileage. Announced by Rachel Reeves, this major reform aims to reshape the country’s motoring tax structure starting April 2028.
Under the new system, owners of electric vehicles (EVs) will pay 3p per mile, while drivers of plug-in hybrids will be charged 1.5p per mile. This means that drivers covering 10,000 miles annually in an EV will be required to pay £300 each year under the new charge. These fees will be added to the existing vehicle tax payments.
Officials argue this approach will create a fairer tax framework by ensuring drivers contribute proportionally to road maintenance costs, similar to petrol and diesel drivers who pay through fuel duty. However, critics warn this could deter many from switching to electric vehicles, especially as financial incentives diminish. Simon England, founder of ALA Insurance, highlighted concerns that increasing costs might discourage EV adoption ahead of the 2030 ban on internal combustion engine (ICE) vehicles.
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This new pay-per-mile scheme follows last year’s introduction of standard vehicle tax for EVs, further increasing their costs. With millions relying on their cars for long commutes, the taxation changes raise concerns about affordability and the future of transportation in the UK.