UK Confirms Pay-Per-Mile Tax for Electric Cars from 2028

The UK government has confirmed how its new pay-per-mile tax for electric and plug-in hybrid cars will work, marking a major shift in how motorists are taxed as the country moves away from petrol and diesel.

From April 2028, fully electric cars will face a charge of 3p per mile, while plug-in hybrids will pay 1.5p per mile. The new Electric Vehicle Excise Duty (eVED) will be paid alongside existing Vehicle Excise Duty.

The tax is being introduced as fuel duty revenues are expected to fall sharply as more drivers switch to electric vehicles. Unlike petrol and diesel motorists, EV owners do not currently pay a tax linked directly to how far they drive. The government says eVED will help create a more sustainable motoring tax system, with drivers who travel more contributing more to public finances and to the costs of congestion and road use.

Even so, electric vehicle drivers will still pay less per mile than petrol and diesel motorists. The 3p rate for electric cars is around half the average fuel duty currently paid per mile by conventional vehicles.

Drivers will estimate their annual mileage when renewing their vehicle tax, with the charge built into the existing VED system. The government says motorists will not need tracking devices or have to report where and when they drive.

Following more than 5,000 responses to its consultation, the government has also dropped plans for extra mileage checks on vehicles under three years old and simplified the system for fleets and leasing companies.

The policy has previously faced criticism from the automotive industry. Responding to the original announcement in November 2025, the Society of Motor Manufacturers and Traders (SMMT) warned that introducing a new mileage-based tax at a pivotal point in the UK's EV transition could deter consumers and make it harder for manufacturers to meet ZEV Mandate targets.

While recognising the need for a new approach to motoring taxation, the SMMT described the proposed system as the “wrong measure at the wrong time” and called for a broader rethink developed in partnership with industry.

The move marks one of the biggest changes to UK motoring taxation in decades and highlights the challenge of replacing fuel duty as Britain's vehicle fleet becomes increasingly electric.