The pay-per mile tax on electric cars from 2028 is something that has sparked widespread concern among drivers, manufacturers, and environmental groups. Under the new system, EV owners will pay 3p per mile, with mileage tracked via annual MOT checks.
While the government argues this ensures fairness as fuel duty revenues decline, critics warn the policy could “kill demand” for electric cars by eroding their cost advantage. Industry forecasts suggest hundreds of thousands fewer EVs could be sold as a result, raising questions about whether this tax undermines Britain’s net-zero ambitions and the transition to cleaner transport.
What’s Changing?
From April 2028, drivers of electric cars will face a new pay-per mile tax, confirmed in Chancellor Rachel Reeves’ Autumn Budget. Under the scheme, EV owners will pay 3p per mile, while plug-in hybrid drivers will pay 1.5p per mile. Mileage will be checked annually during MOT inspections, with readings sent directly to the DVLA, says Tech Digest.
The Treasury expects the levy to raise £1.9 billion by 2030, plugging the gap left by collapsing fuel duty revenues as more motorists switch to zero-emission vehicles.
Why Introduce the Pay-Per Mile Tax?
Fuel duty currently brings in around £25 billion a year, but this revenue is shrinking as petrol and diesel cars are replaced by electric cars. The government argues that road users should contribute fairly to public finances, regardless of whether they drive fossil-fuel or battery-powered vehicles.
Officials also stress that the EV rate is roughly half the fuel duty rate paid by petrol drivers, meaning electric cars remain cheaper to run overall.
Industry Backlash
Despite these assurances, the automotive industry has reacted strongly. The Office for Budget Responsibility (OBR) predicts the tax could lead to 440,000 fewer electric car sales across the UK by 2030. Manufacturers warn that the levy risks stalling momentum at a critical time, just as EV adoption is accelerating.
Motoring groups have branded the policy “confusing” and “counterproductive,” arguing that it sends the wrong signal to consumers who are already hesitant about switching to electric cars.
Impact on Drivers
For the average EV driver covering 8,500 miles a year, the tax will add around £255 annually to running costs. This comes on top of the £195 Vehicle Excise Duty (VED) charge introduced earlier in 2025.
While EVs remain cheaper to fuel than petrol cars, the cumulative effect of new taxes could erode the financial advantage. Critics say this risks deterring households from making the switch, particularly during a cost-of-living crisis.
Environmental Concerns
Campaigners argue that the pay-per mile tax undermines the UK’s net-zero ambitions. With transport accounting for nearly 25% of UK emissions, encouraging the uptake of electric cars is vital. According to Car Magazine, by increasing costs, the government risks slowing adoption and prolonging reliance on polluting vehicles.
Environmental groups are calling for a more balanced approach — one that secures revenue without discouraging greener choices. Suggestions include targeted subsidies, scrappage schemes, or exemptions for low-income households.
Final Thoughts
The pay-per-mile tax represents a major shift in how electric cars are treated by the Treasury. While the government insists it’s about fairness and fiscal responsibility, industry experts warn it could “kill demand” at a crucial moment.
For drivers, the message is clear: owning an electric car will no longer mean escaping road taxes. For policymakers, the challenge is balancing revenue needs with climate commitments. And for the industry, the fear is that this policy could stall the UK’s transition to cleaner transport just as momentum was building.
With talk of a pay‑per mile tax threatening to “kill electric car demand,” some drivers may be considering their options.
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