Overview
The UK will introduce a pay-per-mile road tax for electric vehicles (EVs) and plug-in hybrids (PHEVs) starting in 2028, adding a new running cost as the government reshapes motoring taxes during the transition away from petrol and diesel.
Rates and timeline
- Start: 2028–29 fiscal year.
- EVs: 3 pence per mile.
- PHEVs: 1.5 pence per mile.
- Indexation: Rates will rise with inflation.
- Fuel duty: Freeze on petrol/diesel duty extended until September 2026.
What drivers might pay
- EV at 5,000 miles/year: £150.
- EV at 8,500 miles/year: £255 (Office for Budget Responsibility example).
- EV at 10,000 miles/year: £300.
- PHEV drivers would pay roughly half the EV amounts at the initial rates.
Revenue and market impact
- Forecast revenue: £1.1 billion in 2028–29, rising to nearly £1.9 billion by 2030–31 (Office for Budget Responsibility).
- Projected sales impact: about 440,000 fewer EV sales over five years as lifetime ownership costs rise (OBR forecast).
Offsetting measures
- Electric Car Grant: Extended with an additional £1.3 billion through 2030 to reduce upfront costs.
- Charging infrastructure: £200 million to improve public charging reliability and coverage.
Context and rationale
The measures reflect a shift toward taxing road use as fuel-duty revenues decline. The article reports the initial EV per-mile charge is roughly half what petrol and diesel drivers pay in fuel duty for a similar distance (a reported comparison), signaling a phased approach rather than full parity at the outset. The government has not yet detailed the administrative mechanism for tracking mileage.
Implications for consumers and fleets
- Higher operating costs for EVs and PHEVs, with greater impact on high-mileage users and fleets.
- Inflation-linked rates mean per-mile costs will increase over time.
- Extended grants and charging investment aim to cushion purchase prices and reduce charging barriers.
- Automakers and dealers may adjust product planning, marketing, and allocation to a slower EV adoption trajectory.
Key takeaways
- Per-mile levy: EVs at 3p/mile; PHEVs at 1.5p/mile from 2028, indexed to inflation.
- OBR expects £1.1bn in first-year revenue and 440k fewer EV sales over five years.
- Support measures include £1.3bn for the Electric Car Grant (to 2030) and £200m for public charging.
- Fuel duty remains frozen until September 2026, offering a clear near-term tax outlook for ICE drivers.
