Labour Ministers Provide Update on Controversial Pay-Per-Mile Vehicle Tax System
Labour ministers have issued a significant update regarding the implementation of a controversial new pay-per-mile vehicle tax system, which is set to impact hundreds of thousands of motorists across the country. The new charge, designed to address falling fuel duty revenues as more drivers transition to electric vehicles, will apply specifically to owners of electric vehicles (EVs) and plug-in hybrids.
How the New Tax Will Work
Under the new rules, drivers will be charged based on the total distance they travel over the course of a year. The rates have been set at 3p per mile for electric vehicle owners and 1.5p per mile for plug-in hybrid vehicles. For context, the average British driver covers approximately 8,500 miles annually, which would result in a charge of £255 for EV owners under the 3p rate.
However, millions of motorists who travel significantly further than this average could face substantially higher costs, potentially adding hundreds of pounds to their annual running expenses. The government has emphasized that this tax is necessary to ensure all drivers contribute to road maintenance, even as fuel duty collections decline due to the shift away from traditional petrol and diesel vehicles.
No Trackers Required
In a key clarification, officials have confirmed that the new tax will not involve the installation of "trackers" in cars. Instead, motorists will pay the mileage charge alongside their annual vehicle excise duty (VED), avoiding the need for a separate tax system or invasive monitoring devices.
A consultation document on the measures states: "It will be set at half of the equivalent rate of fuel duty for electric cars, and half again for plug-in hybrid cars. eVED will ensure all car drivers contribute, but will still maintain important incentives to switch to an electric vehicle."
The document further explains: "eVED will not require 'trackers' in cars, nor will the Government ask people to interact with a whole new tax system: car drivers will pay for the miles they drive alongside paying their usual road tax (VED)."
Implementation Timeline and Official Statements
The new Electric Vehicle Excise Duty (eVED) is scheduled to be introduced in April 2028, following its announcement at the autumn Budget in 2025. Treasury minister Dan Tomlinson commented on the policy, saying: "At autumn Budget 2025, the Government announced the introduction of Electric Vehicle Excise Duty (eVED), a new mileage charge for electric and plug-in hybrid cars, which will come into effect from April 2028. Drivers will pay for their mileage alongside their existing Vehicle Excise Duty (VED)."
This change marks a significant shift for EV owners, who have previously been exempt from such charges, and is expected to generate considerable discussion among motorists and environmental advocates alike as the implementation date approaches.
