UK To Tax Electric Cars by the Mile Starting 2028

The UK government will levy a pay-per-mile tax on electric and plug-in hybrid vehicles starting April 2028, UK’s finance minister Rachel Reeves announced, a measure designed to offset some of the fuel duty revenue that will disappear as drivers shift away from petrol and diesel cars. Electric vehicles will be charged 3 pence per mile and plug-in hybrids 1.5 pence per mile, payable annually alongside car tax. An average driver covering 8,000 miles a year would pay around $320, roughly half what a petrol or diesel driver pays in fuel duty.

The Office for Budget Responsibility expects the tax to generate $1.45 billion in its first year and $2.51 billion by 2030-31, offsetting about a quarter of the revenue losses projected from the EV transition by 2050. The Society of Motor Manufacturers and Traders warned the new charge would “suppress demand” and make sales targets harder to achieve. New Zealand and Iceland have already introduced road pricing for EVs; demand dropped in the former but held steady in the latter.