Labour has quietly updated its pay-per-mile plan in the Autumn Budget, a move most drivers are unlikely to have noticed. From 2028, electric car owners will pay 3p per mile to use the roads, with plug-in hybrid rates set at 1.5p per mile. This means the average motorist travelling 10,000 miles per year will face a bill of £300.
Key details of the new scheme
The updates around the new electric Vehicle Excise Duty (eVED) charge were included in the Treasury's Budget document rather than announced in the Commons. The plan, originally developed by Rachel Reeves, had faced calls for John Healey to abandon it, but it has remained in place.
Critics point to potential unfairness, as those who are forced to drive to work and live outside cities will likely pay more. The charge has been described as a tax on postcodes.
Digital tracking system
The plan also includes a digital tracking system using in-built connectivity features to automatically log mileage, so road users will not need to manually input their figures. The Treasury has said this technology could also support mileage estimation for the coming year.
Treasury officials have stressed that this will be an "opt-in system," giving drivers a choice. However, motorists who opt out will need to provide an accurate odometer reading and correctly estimate their mileage for the forthcoming tax period. Compliance arrangements will place responsibility on owners to accurately report their mileage.
Impact on EV transition
eVED is being introduced to offset the loss of fuel duty revenue as more motorists switch to electric vehicles. The plan carries risks for Labour, as lower costs were a major incentive for prospective EV owners, and these charges could reduce that benefit. The government remains committed to the petrol and diesel car ban and the EV transition, but the success of this approach remains uncertain.
