Electric Vehicle Owners Face New Pay-Per-Mile Tax System
Chancellor Rachel Reeves is set to introduce a groundbreaking new taxation system for electric vehicles as part of the upcoming Budget announcement. The move comes in response to what the Treasury has described as a "deeply disappointing" leak from the Office for Budget Responsibility.
The new scheme will fundamentally change how electric vehicle owners contribute to road maintenance and infrastructure costs. From the 2028-29 tax year, battery electric car drivers will be charged £0.03 per mile, while plug-in hybrid vehicles will face a lower rate of £0.015 per mile.
What the New Tax Means for Drivers
For the average battery electric car owner covering approximately 8,500 miles annually, the new system translates to an additional £255 charge in the 2028-29 tax year. This represents a significant shift from the current situation where electric vehicles contribute nothing through fuel duty.
The government has emphasised that the primary objective is to establish a fairer system for all road users. With the rapid adoption of electric vehicles, the Treasury has become increasingly concerned about the growing gap in road taxation as traditional fuel duty revenues decline.
Supporting the EV Transition Continues
Despite introducing the new charge, ministers have stressed their commitment to maintaining support for the transition to electric vehicles. The government insists it remains dedicated to making electric vehicle ownership more accessible and affordable for British drivers.
The four-year lead time before implementation, starting in 2028-29, is designed to give both consumers and manufacturers adequate time to prepare for the changes. This approach aims to balance the need for fair taxation with continued encouragement for electric vehicle adoption.
Rachel Reeves and her team at the Treasury are expected to provide further details about how the mileage tracking system will work and what measures will be put in place to protect driver privacy when the full Budget is presented to Parliament.
