UK Introduces Pay-Per-Mile Road Tax for Electric Vehicles

The UK government has announced a new pay-per-mile road tax for electric and plug-in hybrid vehicles starting in 2028.

Electric vehicle drivers will be charged 3 pence per mile, while plug-in hybrid drivers will pay 1.5 pence per mile.

This tax will increase annually with inflation.

For an annual distance of 8,500 miles, the tax will amount to about £255, which is roughly half of what petrol and diesel drivers currently pay.

The Office for Budget Responsibility estimates that this policy will generate £1.1 billion in revenue in 2028-29, rising to £1.9 billion by 2030-31.

However, the increased ownership cost could reduce EV sales by nearly 440,000 over the next five years.

The budget also includes measures to boost electric car adoption, such as raising the threshold for the expensive-car supplement on EVs from £40,000 to £50,000, allocating £1.3 billion to extend the electric car grant until 2030, and providing £200 million to strengthen charging infrastructure across the country.

Additionally, the freeze on fuel duty will continue until September 2026.