Some drivers will soon be required to pay a new tax based on the number of miles they travel each year.
Chancellor Rachel Reeves has confirmed the rollout of a pay-per-mile system detailing how it will function and which drivers will be affected.
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How the Scheme Will Work
The new tax will apply to selected vehicle types specifically electric vehicles (EVs) and plug-in hybrid cars.
Drivers will be charged either 3p or 1.5p per mile depending on the category of their vehicle.
Implementation Date
The scheme is scheduled to begin in April 2028.
Motorists planning to switch to electric vehicles in the coming years will need to account for these additional expenses.
Expected Costs for Drivers
For many drivers the new charge could add up to several hundred pounds annually.
For example an EV owner driving 10,000 miles per year could pay around £300 extra annually in addition to standard vehicle tax.
Those covering greater distances will face significantly higher costs.
Example Cost Table
| Annual Mileage | Cost per Mile | Estimated Annual Charge |
|---|---|---|
| 8,000 miles | 3p | £240 |
| 10,000 miles | 3p | £300 |
| 12,000 miles | 3p | £360 |
| 10,000 miles | 1.5p | £150 |
Government’s Position
The Government states that this policy is aimed at creating a more balanced taxation system.
Petrol and diesel drivers already contribute based on their mileage through fuel duty and related charges. As EV adoption rises this new system is intended to recover lost tax revenue.
Industry Concerns
However concerns have been raised that the move could negatively impact electric vehicle adoption.
Simon England founder of ALA Insurance noted that while drivers are being encouraged to switch to electric vehicles ahead of the 2030 ban on petrol and diesel cars financial incentives are gradually being reduced.
He warned that if EV drivers end up paying equal or higher costs than traditional vehicle owners it could discourage many from making the switch.
Official Statement
Treasury minister Dan Tomlinson stated that the electric vehicle excise duty (eVED) will include a mileage-based charge for EVs and plug-in hybrids.
This new system will officially take effect from April 2028.
