A new pay‑per‑mile tax for electric cars, due to begin in April 2028, has raised concerns among drivers, manufacturers and environmental groups. Under the policy, EV owners will pay 3p per mile, with mileage recorded during annual MOT tests and submitted to the DVLA.
The government argues that the change ensures fairness as fuel‑duty revenues decline, but critics warn the tax could reduce the financial appeal of electric cars and slow the transition to cleaner transport.
What’s Changing?
From 2028:
- Electric cars will be charged 3p per mile
- Plug‑in hybrids will be charged 1.5p per mile
- Mileage will be verified during MOT inspections
The Treasury expects the levy to raise £1.9 billion by 2030, helping offset falling fuel‑duty income as more drivers switch to zero‑emission vehicles.
Why Introduce a Pay‑Per‑Mile Tax?
Fuel duty currently generates a significant portion of government revenue, but this is decreasing as petrol and diesel vehicles are replaced by EVs. Officials argue that all road users should contribute fairly to public finances.
They also highlight that the EV rate remains lower than the equivalent cost paid by petrol drivers, meaning electric cars should still be cheaper to run overall.
As drivers weigh up long‑term running costs, our comparison of whether an electric car or a petrol car is cheaper to run helps put the potential impact of a pay‑per‑mile tax into perspective.
Industry Concerns
Industry forecasts suggest the tax could reduce EV sales significantly over the next decade. Manufacturers warn that the policy risks slowing momentum at a crucial stage of the UK’s transition to electric vehicles.
Motoring groups have described the policy as unclear and potentially discouraging for drivers who are already hesitant about switching to electric.
Impact on Drivers
For an EV driver covering 8,500 miles per year, the tax would add around £255 to annual running costs. This comes in addition to the Vehicle Excise Duty (VED) charge introduced earlier in 2025.
While EVs remain cheaper to fuel than petrol cars, the combined effect of new taxes may reduce the financial advantage for some households.
And with new EV‑specific charges on the horizon, our breakdown of the UK’s latest electric‑vehicle tax changes explains how upcoming policies could influence demand even further.
Environmental Concerns
Environmental groups argue that increasing the cost of EV ownership could slow progress toward the UK’s climate goals. Transport remains one of the largest contributors to national emissions, and encouraging EV adoption is seen as essential.
Some campaigners suggest alternative approaches, such as targeted incentives, scrappage schemes or support for low‑income households, to balance revenue needs with environmental priorities.
And if shifting tax rules have you reassessing what your vehicle might be worth in the long run, our valuation guidance helps you understand how policy changes can influence resale value.
Final Thoughts
The pay‑per‑mile tax marks a significant shift in how electric cars will be taxed in the UK. While the government emphasises fairness and fiscal responsibility, industry experts warn that the policy could reduce demand at a critical moment for EV adoption.
For drivers, the change means electric cars will no longer be exempt from road‑use charges. For policymakers, the challenge is balancing revenue needs with long‑term climate commitments.
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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