How the pay per mile EV tax affects UK drivers

Vicky Edmonds, CEO of EVA England, described the UK government's introduction of a 3p-per-mile road tax on EV drivers from 2028 as the “biggest announcement” of the budget. EVA England, an association advocating for EV drivers, works to ensure that regulatory policies support all drivers during the transition to electric vehicles.

The group actively engages with the government to promote an equitable shift to EVs. Edmonds discussed the Autumn Budget’s impact on UK consumers with EV Infrastructure News, highlighting three key announcements. The most significant was the per-mile levy for electric and plug-in hybrid vehicles, set to begin in 2028. This electric vehicle excise duty (eVED) aims to modernize the tax system for cleaner transport and address revenue losses from declining fuel duty as EV adoption grows.

Edmonds noted, “We always knew this was a conversation that needed to happen; no EV driver genuinely expected to continue to use the roads for free.” The government emphasized that the new rates are about half the fuel duty currently paid by petrol and diesel drivers and stated that the tax will help fund an additional £200 million for EV infrastructure.

Another announcement in the Autumn Budget was an extra £1.3 billion allocated to the Electric Car Grant (ECG), which helps subsidize the cost of electric cars for consumers. Responding to calls for action, the government also committed to reviewing the cost of public EV charging, with the review starting in Q1 2026 and findings expected by Q3 2026.

While the government highlighted the benefits of the new eVED, it is important to note that this policy comes amid ongoing fuel duty freezes, with the Chancellor extending the freeze for another three years at an estimated annual cost of £900 million in lost tax revenue. Edmonds expressed concern about the timing of the announcement, saying the shock and uncertainty could make consumers question whether switching to an EV is the right choice and how much it will cost.

The charge will take effect from April 2028, giving the automotive industry and consumers a three-year transition period. However, Edmonds pointed out that 2028 is “really two years away” and will be a challenging year for meeting the government’s zero emissions vehicle (ZEV) mandate targets. “We need to make sure, if this is going to happen, that it doesn't impact sales.”

The Office for Budget Responsibility (OBR) estimates that the per-mile charge could reduce EV sales by about 440,000 units, though other government policies may offset around 130,000 of these losses. Edmonds stressed the importance of communicating that the government supports the transition and that the policy is intended to make it fairer and easier for everyone.

Currently, market conditions are “generally difficult,” and consumer confidence remains low. EVA England survey results show that nearly 40% of drivers say they’ll never drive electric, indicating ongoing skepticism about EVs’ suitability and reliability.

Edmonds noted that asking people to adopt a new technology that operates differently from their previous cars is a significant leap of faith, and the perceived lack of government commitment makes it harder to build trust. The new policy also introduces additional costs for consumers.

Even with the eVED, those with driveways who can access domestic charging tariffs will still find EVs cheaper to run than internal combustion engine (ICE) vehicles. However, drivers without driveways, who rely on public charging, will pay more to run an EV than an ICE vehicle. Since the main message promoting EVs is their cost advantage, this policy could threaten adoption.

Edmonds also highlighted a less-publicized but potentially beneficial change: the threshold for the ‘expensive car supplement’ or Luxury Vehicle Tax has been raised, now applying to vehicles costing over £50,000, reflecting the higher price range of many EVs.

The additional £1.3 billion for the ECG is welcomed, but Edmonds emphasized that incentives should be “targeted where they’re needed.” Focusing solely on the new car market is not the most effective way to increase EV adoption or use taxpayers’ money efficiently.

EVA England plans to urge the government to direct the new funding to support lower-income households and the used car market, where most people buy their vehicles. While 80%-90% of UK drivers purchase second-hand cars, fewer than 25% of EV drivers do the same, possibly due to the immature second-hand EV market or lack of attractive options.

Edmonds argued that simply supporting the new car market is neither efficient nor effective. To encourage widespread adoption, the used car market must offer more affordable models. Other countries, like France with its social leasing scheme, have shown that when prices are right, consumers choose electric.

She added that a stable transition depends on persuading the mass market to adopt EVs. Current government policy continues to focus on new cars and those with driveways, which does not provide a strong foundation for a successful transition.

Edmonds stressed the need to consider the entire system and driving community to ensure stability. While there are differing views on whether the new or second-hand market drives EV sales, most consumers simply want a reliable car at the right price. Trust, especially in battery health, is a key concern in the second-hand market.

Although a UN standard exists for battery health in used vehicles, there is no UK regulation for battery safety. The government should legislate to ensure buyers feel confident in their vehicles’ safety, helping to counteract fears about EV batteries.

Edmonds identified the cost of public charging as the “biggest single barrier” to EV adoption, especially for those without driveways who rely on public networks and pay significantly more. She urged the government to act quickly to reduce these costs to ensure a stable and successful transition.

A recent ChargeUK report showed that much of the cost for chargepoint operators comes from energy prices and the structure of the electricity market, which drives up public charging prices. These costs are passed on to consumers, making public EV charging as expensive as, or more expensive than, refueling ICE vehicles.

Edmonds welcomed the government’s consultation on this issue but noted that the higher VAT on public charging (20%) compared to home charging (5%)—the so-called pavement tax—adds to the disparity. She cautioned that simply reducing VAT may not lower consumer costs unless all factors driving up electricity prices are addressed.

To make EVs cheaper to run, the cost per kilowatt-hour needs to be about 47 pence, even before considering the new eVED charge. Edmonds called for the government to examine all elements affecting charging costs and use its influence to bring prices down, as reducing chargepoint prices is essential for the transition’s success.