Chancellor Rachel Reeves could be planning a new pay-per-mile tax on electric vehicles, with proposals suggesting EV drivers could be charged 3p for every mile travelled. The move is expected to be outlined in the autumn budget later this month and would begin in 2028, following a public consultation.
This would aim to address the shortfall in government income as fuel duty revenues decline. Currently, drivers of petrol and diesel vehicles pay around £600 per year in fuel duty on average. With more drivers switching to electric, the government is looking for a way to balance this out. Estimates suggest the policy could bring in around £250 annually per EV driver.
By 2028, up to 6 million EVs could be on UK roads. The Society of Motor Manufacturers and Traders reports that over 1.3 million electric cars are already in use. The chancellor is said to be considering the plan as part of efforts to address a fiscal gap of up to £30 billion before the end of the current parliament.
The Campaign for Better Transport previously pushed for the introduction of pay-per-mile charging, and the Tony Blair Institute suggested a tiered system of 1p a mile for cars and vans, and between 2.5p to 4p a mile for larger goods vehicles.
The government says it has invested £4 billion in the EV transition so far, including grants of up to £3,750 per eligible vehicle. While the new tax could add costs for EV drivers, officials stress it’s part of a bigger plan to support both infrastructure funding and the ongoing shift to cleaner transport.
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