Does the UK’s New EV Mileage Tax Match Its Green Ambitions?
The UK Government has confirmed that from April 2028, electric vehicles will face a new per-mile tax as part of reforms to the motoring tax system. The rate will be 3p per mile for battery-electric cars and 1.5p for plug-in hybrids, increasing each year with inflation. While the change brings EVs into the mainstream tax framework, it also prompts a broader debate: is a flat per-mile charge the right model for a country pursuing ambitious climate targets?
For a typical EV driver, the new charge works out to roughly £255 a year, depending on mileage. The Treasury expects to raise £1.1 billion in the first year, rising to £1.9 billion by 2030–31 as EV uptake grows. Supporters argue the rate keeps EV running costs below petrol and diesel while helping replace declining fuel-duty revenues. Critics warn it risks slowing the shift to clean transport just as adoption needs to accelerate.
According to the Office for Budget Responsibility (OBR), the new tax is expected to reduce EV sales by 440,000 across the forecast period. While new incentives—such as an expanded electric car grant and a higher Expensive Car Supplement threshold—offset most of this, the net impact is still around 120,000 fewer EVs on the road, plus a modest dip in average mileage.
This raises a central question: does a flat per-mile charge match the UK’s environmental ambitions? A uniform rate treats every EV mile the same, regardless of a vehicle’s efficiency, weight, manufacturing footprint or impact on the grid. Administratively, that simplicity is intentional—flat taxes are easy to introduce, predictable for revenue, and straightforward for the public to understand.
But simplicity isn’t particularly “green.” An efficient compact EV pays the same as a heavy electric SUV, despite major differences in energy use and resource intensity. The tax also ignores behaviours that support the electricity system, such as smart charging or vehicle-to-grid services, and overlooks sustainability standards already recognised in the UK’s EV grant criteria.
There are several ways a more environmentally aligned system could evolve. Efficiency-based rates could reward EVs with low energy consumption. Weight or size banding could reflect road wear and embedded carbon. Sustainability credits could mirror grant rules—lower rates for long battery warranties or greener manufacturing. Price-based tiers would ensure luxury EVs pay more. And smart-charging discounts could reward drivers who reduce peak demand.
For now, the government’s model prioritises stability over precision. A flat rate brings EVs into the tax system quickly and cheaply, avoiding the privacy, data and enforcement challenges of more dynamic schemes. But as the EV market matures and real-time charging data becomes more accessible, a next-generation tax—one that reflects efficiency, sustainability and grid value—could ultimately support both the Treasury and the UK’s climate goals far more effectively.