London, November 27, 2025
The UK government will introduce a new pay-per-mile road tax for electric vehicles starting in April 2028. Battery electric vehicle owners will pay 3p per mile, while plug-in hybrid drivers will be charged 1.5p per mile, aiming to maintain infrastructure funding as fuel tax revenues decline.
Details of the New Electric Vehicle Excise Duty
Beginning in April 2028, electric vehicle (EV) owners in the United Kingdom will face the Electric Vehicle Excise Duty (eVED), a mileage-based road tax. The tax will apply to battery electric vehicles (BEVs) at a rate of 3p per mile and plug-in hybrids (PHEVs) at 1.5p per mile. This new charge reflects the government’s transition from traditional fuel taxes to a usage-based model as EV adoption continues to grow.
The policy targets fair revenue generation for road maintenance, ensuring that all motorists contribute equitably regardless of the vehicle’s propulsion type. This initiative is part of a broader strategy to adapt taxation frameworks to the evolving transport landscape.
Impact on Electric Vehicle Owners
The average driver, covering approximately 8,500 miles per year, can expect to incur an additional annual cost estimated between £255 and £260 due to this new tax. It is important to note that this mileage-based charge will be levied in addition to the existing Vehicle Excise Duty (VED), thereby increasing the overall taxation on EV operations.
The government has emphasized fairness as a key factor behind the decision, recognizing that as petrol and diesel vehicles diminish, alternative taxation models are necessary to replace declining fuel duty revenues. This mechanism ensures that EV drivers contribute proportionally to road infrastructure funding based on their actual road use.
Broader Policy Context and Global Implications
Coinciding with the introduction of eVED, the threshold for the Expensive Car Supplement (ECS) has been raised. This adjustment means that more mid- and higher-spec EVs will be exempt from the surcharge meant for luxury vehicles, likely cushioning the financial impact on higher-end EV owners.
The UK’s move marks a pioneering step internationally. As one of the first major markets to implement a direct pay-per-mile tax for electric vehicles, the country sets a precedent that may influence global policymaking on EV infrastructure funding and taxation.
This shift underlines a broader trend toward usage-based taxation models, reflecting a strategic response to the reduced fiscal viability of fuel taxes in an increasingly electrified vehicle fleet.
Significance and Future Implications
While the introduction of eVED represents a clear rise in running costs for electric vehicles, the government’s position remains that EVs will continue to offer overall cost savings compared to petrol or diesel alternatives, particularly when factoring in lower maintenance and fuel costs.
The shift to a mileage-based tax assists in addressing the fiscal challenges posed by declining fuel duty revenues, ensuring sustained funding for road maintenance and infrastructure development.
From a policy standpoint, this decision signals a fundamental transformation in vehicle taxation. Governments worldwide are likely to observe the UK’s approach closely, potentially adopting similar models that align tax contributions with actual road usage rather than fuel consumption.
As EV adoption accelerates, such measures will become increasingly critical to sustaining transport infrastructure and delivering equitable taxation aligned with contemporary mobility patterns.