London, November 28, 2025
Electric vehicle (EV) owners in the United Kingdom will face a new pay-per-mile tax starting April 2028, announced as part of the 2026 budget. This measure introduces charges based on mileage driven to help maintain road infrastructure funding amidst rising electric vehicle adoption.
Details of the Pay-Per-Mile Tax System
From April 2028, fully electric vehicles will incur a charge of 3 pence per mile traveled, complementing the existing annual Vehicle Excise Duty (VED) currently set at £190. Plug-in hybrids will be taxed at a reduced rate of 1.5 pence per mile. When vehicle owners renew their tax registration, they must declare an estimated annual mileage. The tax authority will then calculate the fee based on this projection. At the subsequent annual renewal, adjustments will be made: owners will either pay additional charges if they underestimated their mileage or receive credits if they overestimated.
Luxury Vehicle Surcharge
An additional yearly surcharge of £440 will apply to vehicles with a list price exceeding £40,000. This represents an increase from the previous £425 annual charge and is levied on top of the mileage-based fees. This policy aims to capture additional revenue from higher-value vehicles.
Global Context and Policy Rationale
The UK’s pay-per-mile tax echoes a growing international trend toward mileage-based road user charges as traditional fuel taxes become less effective with the rise of zero-emission vehicles. Similar initiatives are underway elsewhere; California, for example, has explored road charge systems to address declining petrol tax revenues. This shift reflects government recognition that electric vehicle owners do not contribute to fuel duties, signaling the need to develop alternative and equitable funding models for road maintenance.
As electric vehicle adoption accelerates, sustaining infrastructure investment is critical. The new tax system in the UK is designed to ensure that all road users contribute fairly to upkeep costs, regardless of fuel type. This approach seeks to balance environmental objectives with the practicalities of transportation funding in a transitioning automotive landscape.