The debate over whether it’s cheaper to run an electric car or a petrol car has intensified following the UK government’s decision to introduce a pay‑per‑mile tax on EVs from 2028. Under the new scheme, electric car drivers will pay 3p per mile, raising concerns that the financial advantage of going electric could be eroded. While EVs still benefit from lower charging and maintenance costs compared to petrol vehicles, the added tax narrows the gap, especially for high‑mileage drivers.
The New Tax Explained
From April 2028, electric car drivers will face a new pay‑per‑mile tax of 3p per mile, confirmed in Chancellor Rachel Reeves’ Autumn Budget. Plug‑in hybrids will pay 1.5p per mile, with mileage tracked via annual MOT checks. The Treasury expects this to raise billions, plugging the gap left by declining fuel duty revenues as petrol and diesel cars are phased out.
For the average UK driver covering 7,400 miles per year, the tax adds around £222 annually on top of existing Vehicle Excise Duty (VED) charges.
Electric Car Running Costs
Even with the new tax, electric cars retain some financial advantages:
- Fuel savings: Charging at home typically costs 7–10p per mile, compared to 15–20p per mile for petrol, depending on fuel prices.
- Maintenance: EVs have fewer moving parts, meaning lower servicing costs over time.
- Company car benefits: EVs still enjoy lower Benefit‑in‑Kind tax rates, making them attractive for fleet drivers.
However, the pay‑per‑mile levy narrows the gap. A driver doing 10,000 miles annually could see an extra £300 in tax, reducing the savings compared to petrol.
Petrol Car Running Costs
Petrol cars remain subject to fuel duty (52.95p per litre) plus VAT, which equates to roughly 12–15p per mile depending on efficiency. For a driver covering 7,400 miles, that’s around £1,000 in fuel duty alone, far higher than the £222 EV tax.
But petrol cars don’t face the upfront cost of installing home chargers, and second‑hand petrol models are often cheaper to buy than electric cars.
Cost Comparison Table
This is what the comparison figures look like, according to This Is Money:
| Factor | Electric Car (with EV tax) | Petrol Car |
|---|---|---|
| Fuel/charging per mile | ~7–10p (home charging) | ~15–20p |
| New tax (from 2028) | 3p per mile (~£222/year) | Included in fuel duty |
| Annual servicing costs | Lower (simpler mechanics) | Higher (engine, exhaust, etc.) |
| Vehicle Excise Duty | £195 (from 2025) + EV tax | £195 + fuel duty |
| Typical annual cost (7,400 miles) | ~£740–£950 + £222 tax | ~£1,100–£1,400 |
Industry Concerns
The Office for Budget Responsibility (OBR) predicts the tax could lead to 440,000 fewer EV sales by 2030, warning it risks stalling adoption. Motoring groups argue the policy sends the wrong signal, discouraging drivers from switching to electric cars just as uptake is accelerating.
Environmental Angle
With transport responsible for nearly 25% of UK emissions, encouraging electric car adoption is vital. Critics say the pay‑per‑mile tax undermines net‑zero goals by eroding the financial incentive to go electric.
Final Thoughts
So, which is cheaper under the new tax? For most drivers, EVs remain cheaper to run thanks to lower charging and maintenance costs. However, the pay‑per‑mile levy narrows the gap, especially for high‑mileage drivers.
Petrol cars will still cost more per mile overall, but the government’s new policy risks slowing the transition to cleaner transport. The answer depends on your mileage, charging access, and whether you value long‑term savings over upfront costs.
With drivers weighing up whether it’s cheaper to run an electric car or a petrol car under the new pay‑per‑mile tax, some may decide it’s time to switch vehicles.
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