The UK government has confirmed a major overhaul of motoring taxes, introducing a new pay-per-mile charge that will impact an estimated two million drivers across the country.
New Tax Rates for Electric and Hybrid Vehicles
This significant change specifically targets owners of electric vehicles (EVs) and plug-in hybrid models. Under the new system, EV drivers will be charged a rate of 3 pence for every mile they drive. For plug-in hybrid owners, the rate will be set at 1.5 pence per mile.
This levy comes on top of the recent introduction of Vehicle Excise Duty (VED) for electric cars, which had previously been free. Most EV owners now pay a standard £195 annual VED fee.
Calculating the Cost for the Average Driver
The financial impact for the average motorist will be substantial. With the average UK driver covering approximately 8,500 miles per year, a pure electric vehicle owner would face an extra £255 in annual charges from the mileage tax alone.
When combined with the new VED, the total new tax burden for an EV driver doing average mileage rises to £450 per year. Many drivers who cover greater distances will see their costs increase even further.
Government Rationale and Industry Reaction
The new pay-per-mile system is scheduled to come into effect in April 2028. Officials state it is designed to compensate for falling fuel duty revenues as more Britons transition away from petrol and diesel cars.
Mike Fazal, CEO of Leasing.com, commented on the shift. He noted that the tax asks EV drivers to contribute to road funding similarly to traditional fuel users. “A 3p-per-mile charge doesn’t undo the cost advantage of going electric,” Fazal said. “Once you factor in the new levy, most EV drivers are still paying around 11p per mile in total, compared with roughly 17p per mile for a typical petrol car.”
Nevertheless, the move introduces a new and significant running cost for anyone considering switching to an electric vehicle, marking the end of the era of ultra-low taxation for eco-friendly motoring in the UK.
