Electric vehicle drivers will begin paying a per-mile charge from 2028, as the government moves to compensate for dwindling fuel duty revenues and ensure what it calls a fairer contribution to road upkeep. The new policy, announced in last year’s autumn budget, will introduce a 3 pence per mile tax for fully electric vehicles, and a 1.5 pence rate for plug-in hybrids.
Official estimates project the levy will raise £1.1bn annually, offsetting a portion of the Treasury’s losses as motorists switch from petrol. Fuel duty receipts have already fallen from £27.5bn in 2019-20 to an expected £24bn this financial year. A government spokesperson stated the system ensures fairness, noting, “Right now, electric vehicle drivers pay no fuel duty, while petrol drivers pay around £480 a year. That’s not fair. Under the new system, electric vehicles will pay half the duty of petrol cars – still the cheaper, greener choice.”
Rural drivers to bear heaviest burden
Analysis of the policy, however, reveals a stark geographical divide in its impact. Research by The Electric Car Scheme, a leasing group, based on 2024 National Travel Survey data, suggests drivers in the South West of England would pay an average of £110.25 extra per year—nearly four times the £33.09 estimated for Londoners.
The East Midlands would also face high costs, at £105.09 annually, while drivers in the North East and North West would see more modest average increases of £82.20 and £83.79 respectively. The disparity is sharpest between rural and urban areas: those in smaller towns and villages near cities could pay an average of £156.51, compared to £76.02 for people in urban areas and cities.
Thom Groot, chief executive of The Electric Car Scheme which conducted the analysis, warned the tax could deter buyers. “There are still a lot of people in the mass market who are very sceptical about EVs … so anything that gives people a reason not to [buy one] creates yet another boundary,” he said, arguing it risks discouraging take-up just as ownership is meant to transition from “early adopters to the mass market”.
The Countryside Alliance has echoed concerns over fairness, arguing that a simple mileage-based system fails to account for rural necessity. They contend rural drivers often travel further out of necessity and contribute less to congestion, suggesting potential remedies like lower per-mile rates or a rural mileage allowance.
How the new tax would work
The proposed system, currently under consultation until mid-March, would integrate with Vehicle Excise Duty (VED). From April 2028, EV drivers will pay the mileage charge in addition to the standard VED, which remains £195 per year for most EVs after their first year. Drivers would estimate their annual mileage when renewing their VED, pay based on that estimate, and reconcile the figure at year’s end with an odometer reading.
Mileage data from MOT tests will be used for checks, with the government funding additional checks for vehicles under three years old. The scheme explicitly rules out location-based road pricing or mandatory vehicle trackers on privacy grounds.
The tax was announced alongside a £1.3bn boost to the electric car grant, which offers buyers up to £3,750 off the price of a new eligible EV priced at or below £37,000, applied automatically by dealerships.
Wider context for electric vehicle push
The policy arrives at a critical juncture for the UK’s electric vehicle transition. Electric car sales rose by nearly a quarter in 2025 to a record 473,000—about 23.4% of the total market. However, this remains below the 28% target for the year set out in the national Zero Emission Vehicle (ZEV) Mandate, which requires manufacturers to sell a rising percentage of EVs annually, aiming for 100% of new sales to be zero-emission by 2035.
The Office for Budget Responsibility (OBR) has estimated the mileage tax could reduce EV sales by about 440,000 over five years, potentially making it harder for manufacturers to meet their ZEV targets. The OBR also anticipates that revenue from the tax might be lower than forecast as drivers may reduce their mileage in response.
Infrastructure development continues unevenly. As of early 2025, the UK has approximately 70,000-75,000 public EV charging devices across more than 35,000 locations. London leads in provision per 100,000 residents (150-160 devices), while regions like the North East and East Midlands have far lower coverage (40-50). Although rural areas have seen a faster percentage increase in installations recently, the overall disparity in charging access adds to the challenges for non-urban drivers.
Internationally, approaches vary. Some European nations, like Norway, have offered significant tax exemptions for EVs, while others have lower fiscal benefits. The UK’s move to gradually reduce exemptions and extend ownership taxes to battery electric vehicles, with this proposed mileage levy, represents a distinct path.
Despite the new charge, advocates stress the long-term benefits. Thom Groot added: “Even when this tax comes in, the major savings and environmental benefits of going electric remain firmly in place. EVs will continue to be the most practical and future-proof choice for UK drivers.”
