UK Plans 3p-Per-Mile EV Tax from 2028 Amid Revenue Gap Concerns

Electric vehicle (EV) drivers could soon face a new “pay-per-mile” tax under plans being developed by UK Chancellor Rachel Reeves. The proposed charge—expected to be set at around 3 pence per mile from 2028—aims to recover £1.8 billion in lost fuel duty revenue by 2031 as electric cars replace petrol and diesel models.

The move would mark one of the first major attempts to adapt Britain’s tax system for a post-fossil-fuel transport era. A Treasury spokesperson told the BBC the change is about fairness:

“We want a fairer system for all drivers whilst backing the transition to electric vehicles. It is right to seek a tax system that fairly funds roads, infrastructure and public services.”

Critics argue the tax could discourage motorists from switching to cleaner cars—particularly in rural areas where public transport options are limited. Others say the timing undermines the government’s own push to expand EV adoption, given the UK still offers purchase grants and reduced running costs to encourage uptake.

Under the current plug-in grant scheme, qualifying zero-emission cars can receive discounts of up to £3,750, depending on efficiency and sustainability ratings. Band 1 cars, such as the Ford E-Tourneo Courier and Puma Gen-E, qualify for the higher rate, while Band 2 models—including the Volkswagen ID.3, Nissan Ariya, and Peugeot e-208—receive up to £1,500 off.

To qualify, vehicles must produce 0g of CO₂ per kilometre, have a minimum battery range of 100 miles, and meet strict warranty and sustainability criteria. The grant is automatically applied by the dealer at purchase.

While the government maintains the proposed per-mile charge is a matter of long-term fiscal fairness, motoring groups warn it could clash with the country’s clean transport goals. They argue that if EVs are to be taxed, the system should reward smaller, more efficient, or low-impact electric vehicles rather than apply a blanket rate across the board.

As the number of EVs grows rapidly—expected to reach six million by 2031—the challenge for the Treasury is balancing revenue needs with environmental commitments. The coming Budget will show whether Britain can design a tax system that keeps roads funded without stalling the electric transition.