Image generated with Ai

In the United Kingdom, a new pay‑per‑mile car tax is being introduced as part of a broader overhaul of motoring taxation that could eventually extend beyond electric vehicles (EVs) to include petrol and diesel cars. Government consultations confirm that from April 2028, battery electric and plug‑in hybrid cars will pay a mileage‑based Electric Vehicle Excise Duty (eVED), intended to replace lost revenue from falling fuel duty as traditional petrol and diesel usage declines.

Motoring content creators and industry commentators have warned this mileage‑based system — currently directed at EVs and hybrids — may expand to all vehicles in future, fundamentally changing how drivers contribute to road funding. The shift marks a structural change in how the Treasury collects revenue to support public services and infrastructure, particularly road maintenance.

What Is the New Pay‑Per‑Mile Tax (eVED)?

Under the official eVED consultation published by HM Treasury, electric and plug‑in hybrid cars registered in the UK will pay tax based on the distance they drive starting in 2028. The rates currently proposed are:

• Battery Electric Vehicles (EVs): 3 pence per mile
• Plug‑in Hybrid Electric Vehicles (PHEVs): 1.5 pence per mile

This mileage‑based charge will be added to the traditional Vehicle Excise Duty (VED) payment, integrating into the existing system administered by the Driver and Vehicle Licensing Agency (DVLA).

The policy is designed to ensure fairness between drivers of different vehicles, as EV owners currently avoid fuel duty paid by petrol and diesel drivers at the pump. Under the new system, the effort is to balance contributions with actual road use.

Why the Government Is Introducing a Mileage‑Based Charge

The UK government has acknowledged that rising EV adoption means fuel duty receipts — traditionally the main source of revenue linked to vehicle use — are declining. By 2030, as EV ownership grows, a significant proportion of drivers could be paying no equivalent fuel tax unless a new mechanism is introduced.

Government documents explain that the mileage‑based tax is intended to:

• Replace lost fuel duty revenue as combustion engine cars phase out
• Ensure all drivers contribute fairly to road maintenance and infrastructure
• Align taxation with vehicle usage, regardless of fuel type

The current consultation on eVED closes in March 2026, after which detailed implementation plans are expected ahead of the tax’s launch in spring 2028.

How eVED Will Work in Practice

The proposed system aims for simplicity and privacy protection:

1. Annual Mileage Estimate: Vehicle owners will estimate their mileage for the next year when renewing their VED.
2. Upfront Payment: Motorists pay their estimated mileage charge alongside their standard VED.
3. Reconciliation: At year’s end, the actual mileage is recorded (typically at an MOT test) and either a rebate or balancing payment is applied.

There will be no requirement to install GPS or tracking devices, and mileage will be verified via existing systems such as annual MOT checks.

Could the Charge Expand to All Drivers?

Although currently focused on EVs and hybrids, voices within motoring communities and some analysts argue the mileage‑based model’s logic could be extended to petrol and diesel vehicles in future. The core reasoning is that fuel duty revenues will continue to decline as vehicles become more efficient and alternative drivetrains dominate. By basing tax on mileage rather than fuel consumption, the Treasury aims for a sustainable long‑term mechanism.

Industry commentators have noted that pay‑per‑mile taxation may eventually apply to all vehicles, especially if fiscal pressures or infrastructure funding needs grow. This could have wide‑ranging consequences for travel costs across the board. While no official policy currently mandates such an extension, the concept has gained traction in discussions about the future of motoring taxation in the UK.

Impact on Business Travel and Normal Tourists

The introduction of eVED will affect drivers across sectors:

For business travel:

• Fleet operators and corporate car schemes will need to factor in per‑mile costs when budgeting for travel.
• Mileage‑based tax could influence decisions about vehicle types within corporate fleets.
• Businesses relying on frequent travel may need to reassess budgets and travel policies.

For normal tourists and leisure travellers:

• Rental cars and self‑driven tours could incur additional costs, particularly on long journeys.
• Planning around mileage estimates will be critical to avoid unexpected expenses.
• Those touring rural or scenic regions may face higher bills due to longer travel distances.

Overall, while traditional petrol and diesel fuel duty will still apply, the addition of a mileage tax — and potential future extension to all vehicles — means both business and leisure travellers need to factor in these costs when planning journeys in the UK.

Quick Tips for UK Drivers and Travellers

• Estimate Mileage Carefully: To manage yearly charges effectively, motorists should track annual miles and prepare accurate estimates at VED renewal.
• Consider Travel Plans: Tourists planning road travel — especially over long distances — should budget for additional costs under the per‑mile system.
• Monitor Consultation Outcomes: Drivers should engage with the consultation and stay updated on official GOV.UK announcements.
• Compare Vehicle Costs: For business fleets, comparing different drivetrains and tax implications will be important for cost control.
• Factor in Rural Routes: Rural and high‑mileage users may see steeper charges and should adjust travel habits accordingly.

Key Points in Bullets

• eVED will charge EV drivers 3p per mile and PHEV drivers 1.5p per mile from April 2028.
• Tax is integrated into existing VED and collected alongside annual vehicle tax.
• Drivers estimate mileage yearly, with verification via MOT checks.
• Policy aims to replace falling fuel duty revenues as EV adoption increases.
• Potential exists for mileage‑based tax to broaden to all vehicle types in future discussions, altering how road use is funded.

Disclaimer: The Attached Image in This Article is AI Generated