Pay-Per-Mile Car Tax: How Will It Impact EV Owners and the Future of Driving?
Electric vehicle (EV) owners are facing a significant shift in running costs, sparking debate and concern among drivers. Chancellor Rachel Reeves introduced a pay-per-mile tax, specifically targeting EV and plug-in hybrid owners in the Autumn Budget of 2025. This change comes as the exemption to road tax for EVs ended in April 2025.
The New Tax: What You Necessitate to Know
Under the new plan, drivers of electric vehicles will be charged 3 pence per mile, while those with plug-in hybrids will pay 1.5 pence per mile. For a driver covering 10,000 miles a year, this translates to a £300 annual fee. The average British motorist drives around 8,500 miles annually, but many exceed this figure.
Why the Change? Addressing Declining Fuel Duty
The introduction of this tax is largely a response to declining fuel duty revenue as more motorists transition to electric vehicles. Government officials point out that petrol and diesel vehicle owners already contribute through fuel costs and existing taxes.
Impact on Drivers: Who Will Be Most Affected?
Concerns have been raised that individuals with long commutes or those living in rural areas will be disproportionately affected by the pay-per-mile tax. The tax aims to ensure all car drivers contribute to road funding, while still incentivizing the switch to electric vehicles.
How Will Mileage Be Verified?
Mileage verification will take place at annual MOT tests. Cars under three years vintage will require additional mileage checks at garages, funded by the government at no cost to motorists. The government has stated that the system will not require ‘trackers’ in cars, nor will it create a new tax system.
The Bigger Picture: The Future of Road Tax
This new tax represents a fundamental shift in how road usage is funded. As EVs become more prevalent, traditional fuel duty revenue will continue to decline, necessitating alternative funding models. The government’s approach aims to create a sustainable system that ensures all drivers contribute to road maintenance and infrastructure.
What About Cross-Border Drivers?
Electric vehicle owners who frequently cross borders have called for more detail on how the new tax will be implemented and managed across different regions.
Frequently Asked Questions
When will this tax come into effect?
The new tax will not take effect until April 2028.
How does this compare to existing taxes for petrol and diesel cars?
Government officials highlight that petrol and diesel vehicle owners are already paying similar fees through fuel costs and taxes.
Will this tax discourage people from buying EVs?
There are concerns that the tax could deter some potential EV buyers, but the government maintains it will still incentivize the switch to electric vehicles.
Did you know? Treasury minister Dan Tomlinson outlined the Government’s plans, stating that drivers will pay for mileage alongside their existing Vehicle Excise Duty (VED).
Stay informed about the evolving landscape of vehicle taxation and its impact on your driving experience. Explore our other articles for more insights into the world of electric vehicles and sustainable transportation.
