The UK government is doubling down on electric vehicle adoption with plans to ban new internal combustion engine (ICE) car sales by 2030. Yet, in a twist, it will introduce a new per-mile road tax for electric cars and plug-in hybrids starting April 2028. Drivers of EVs will be charged 3p per mile, while those in PHEVs face a 1.5p per mile charge this will be on top of existing vehicle tax. At first glance, this seems at odds with the government’s mission to encourage EV uptake.
The rationale is simple: the government faces a growing shortfall in fuel duty revenue as more drivers switch away from petrol and diesel. Fuel duty accounts for a large chunk of road tax, historically used to maintain roads. With electricity not taxed at a comparable level, the new mileage-based tax, dubbed Electric Vehicle Excise Duty (eVED), aims to make the road tax system fairer by charging according to use, regardless of fuel type.
The UK’s independent Office for Budget Responsibility projects an EV driver covering 8,500 miles annually will pay about £255 in 2028-29 roughly half what petrol drivers pay in fuel taxes. This will generate billions in new tax revenue while maintaining government investment in road infrastructure. However, the flip side is clear: the scheme risks dampening demand for EVs by increasing ownership costs just as the market moves to electric.
Critics see the move as mixed messaging, especially when combined with incentives like purchase grants and charging infrastructure investments. Supporters argue it ensures the road system remains funded sustainably and drivers contribute equitably to road wear and congestion. The government has pledged to revisit charges and incentives as the market evolves, hoping to balance environmental goals with fiscal realities.
This new EV mileage tax reflects the wider challenge governments face worldwide: transitioning transportation to cleaner energy without undermining existing revenue streams that fund crucial infrastructure. As the UK accelerates toward a zero-emissions future, this tax will test drivers’ tolerance and the true costs of going electric.