The UK government has announced a fundamental change to how drivers of electric and plug-in hybrid vehicles will be taxed, moving to a new pay-per-mile system. The shift, confirmed to begin in April 2028, will see these motorists charged based on the distance they travel each year, introducing a new ongoing cost for zero and low-emission motoring.
How the New Mileage Tax Will Work
Under the incoming rules, owners of fully electric vehicles (EVs) will be charged at a rate of 3 pence for every mile they drive. For those behind the wheel of plug-in hybrid models, the rate will be set at 1.5 pence per mile. This means a driver covering the UK's average annual mileage of 8,500 miles would face an extra £255 in tax for an EV, or £127.50 for a hybrid.
Officials state the change is necessary to ensure fairness, as EV owners do not currently contribute through fuel duty. "Everyone who uses the roads should contribute by paying tax," the government said. The move follows an earlier change this year which saw electric car owners pay vehicle excise duty (VED) for the first time.
Impact on Drivers and the EV Market
The new cost will have a variable impact, hitting those with longer commutes or who live in rural areas with limited public transport hardest. With many Brits driving significantly more than the average mileage, their annual tax bill could rise by hundreds of pounds.
Mike Fazal, CEO of Leasing.com, provided analysis on the shift. “A mileage-based tax is the Government’s way of asking electric vehicle drivers to contribute in a similar way to petrol and diesel drivers, who already pay through fuel duty," he explained. "It means all road users will help fund the UK’s transport network, but it does introduce a new cost for anyone weighing up whether their next car should be electric."
Looking Ahead to 2028
With the start date set for April 2028, there is still time for drivers and the industry to adjust. The government anticipates that a much larger proportion of the country's motorists will have switched to electric power by then. Despite the new charge, industry experts suggest the overall cost advantage of electric driving will remain. Fazal added, "A 3p-per-mile charge doesn’t undo the cost advantage of going electric," pointing to lower servicing and energy costs compared to traditional fuels.
The announcement solidifies the government's long-term strategy to replace lost revenue from fossil fuel duties as the nation transitions to net zero, ensuring the Treasury continues to receive funding for road maintenance and transport projects from all vehicle types.
