Electric vehicle (EV) drivers will be subject to a new “mileage-based charge” from April 2028, confirmed in the Chancellor's Autumn Budget.

The charge will apply to both battery electric cars and plug-in hybrids, marking a significant shift in how zero-emission motoring is taxed in the UK.

Battery electric vehicles will incur a charge of 3p per mile, while plug-in hybrids will be charged 1.5p per mile during the 2028–29 financial year. 

The new levy is expected to generate £1.1 billion for the Treasury in its first year, rising to £1.9 billion by 2030 as more EVs join the roads.

However, the Office for Budget Responsbility warns that the tax could have a cooling effect on the UK’s transition to electric motoring. The organisation forecasts 440,000 fewer EV sales over the next five years due to the mileage charge. Government incentives for cleaner vehicles are expected to soften the impact, but only partially, boosting sales by an estimated 130,000 units.

The mileage charge follows another major policy change earlier this year, when electric vehicle owners began paying Vehicle Excise Duty (VED) for the first time, ending a longstanding tax exemption for zero-emission cars.

The government is expected to provide further detail on how the new system will be implemented as part of its wider strategy to replace declining fuel duty revenues in an increasingly electric automotive market.

Vicky Edmonds, CEO of EVA England, says: "This is completely the wrong time to be taxing EV drivers when they still make up only 5% of vehicles on UK roads. We have made tremendous progress to convince more and more drivers that EVs can and do truly work for them, and we genuinely welcome today's announcements to increase the threshold for the luxury car tax for EVs, and to provide more money for subsidies for drivers and charging.

It is also good to see, finally, a promised future increase in fuel duty to encourage more drivers across to electric. But even with that, a Pay per Mile scheme in two years is unnecessarily rocking the boat at such a pivotal point for the market. We are willing to work with Government to ensure EV drivers pay their fair share, but this must be introduced sensibly to avoid slamming the brakes on the transition to electric vehicles."