The UK government has confirmed a major shift in motoring taxation: from April 2028, electric vehicle (EV) drivers will pay 3p per mile, while plug-in hybrid drivers will pay 1.5p per mile. This new system, called Electric Vehicle Excise Duty (eVED), aims to replace lost fuel duty revenue as more drivers switch to zero-emission cars. The Treasury expects to raise £1.1 billion in 2028–29, rising to nearly £2 billion by 2030–31.
Why the Tax?
Fuel duty currently generates around £25 billion annually, but as petrol and diesel cars disappear, that income will collapse. The government argues that all vehicles cause wear and tear on roads, so drivers should pay based on usage, not fuel type. For the average EV driver covering 8,500 miles a year, the tax adds about £255 annually—roughly half the equivalent fuel duty for petrol cars.
Challenges to Implementation
While the principle sounds simple, the practicalities are complex:
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Mileage Tracking: The government has ruled out GPS tracking to avoid privacy concerns, but self-reporting raises risks of fraud and inaccuracies. Current proposals suggest mileage checks during MOTs or annual declarations, but details remain unclear.
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Public Backlash: EV buyers were promised lower running costs. Introducing a new tax feels like a U-turn, and surveys show over 50% of potential EV buyers would reconsider if a pay-per-mile tax is applied. This could slow adoption and undermine the UK’s ZEV mandate, which requires 80% of new car sales to be electric by 2030.
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Industry Concerns: Manufacturers warn the tax sends “the wrong message at the wrong time,” risking investment and consumer confidence. The Office for Budget Responsibility predicts up to 440,000 fewer EV sales over five years because of the policy.
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Administrative Complexity: Implementing a fair, fraud-proof system without intrusive tracking will require new infrastructure and processes—raising costs and technical challenges for the DVLA and MOT network.
Balancing the Books vs. Net Zero
The government insists this is about fairness and funding roads, but critics argue it risks slowing the transition to cleaner transport. To soften the blow, ministers have extended EV grants and raised the luxury car tax threshold, but whether that offsets the negative impact remains to be seen.