Pay–per-mile tax confirmed: EV drivers to pay hundreds of pounds per year
The incoming charges will be applied on top of VED road tax
EV drivers will soon be subject to a pay-per-mile road tax system, costing them an average of £200-300 per year following an announcement in the Autumn Budget by Chancellor Rachel Reeves.
From April 2028, drivers of electric cars ranging from SUVs like the Tesla Model Y, to superminis like the Renault 5 will be subject to a form of road pricing, which will cost three pence per mile driven.
Those driving a plug-in hybrid (PHEV) such as the Toyota Prius will also have to pay, but at a reduced rate of one-and-a-half pence per mile – both this and the EV figure will increase annually in line with the Consumer Price Index. All of this will come on top of Vehicle Excise Duty, which currently standard at £195 per year.
The scheme, according to a report leaked early by the Office for Budget Responsibility, will raise roughly £1.4 billion per year by 2029-30. However, since it was uncovered a few weeks ago by the press, reaction has been overwhelmingly negative; head of policy at Octopus Electric Vehicles, James Courts, said: “EV drivers should pay, but it should come at the right level and time. Now would be far too soon; EVs represent only four per cent of the cars on our roads and a tax would raise a minimal amount until this number is bigger.
“As we’ve seen in other countries, introducing a charge now would stifle the growth we’ve seen over the past years, and be self-defeating,” Court continued. “What is needed is a considered plan for the best and fairest way for all road users to handle the change in vehicle mix over time.”
Even the OBR appears to agree with this sentiment; in its publication, it estimates that by the end of 2031 there will be 440,000 fewer EVs on the road given the deterring effect of the pay-per-mile scheme. However, it’s hoped things will be offset by an increase in the threshold for the £425 Expensive Vehicle Supplement to VED which, from April 2026, will rise from £40,000 to £50,000 for EVs.
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