Introduction: A Road Tax Rethink for the EV Era
After decades of fuel taxes and flat road duties, Britain is poised to make a conceptual leap by taxing electric vehicles per mile driven.
The government plans to introduce an “Electric Vehicle Excise Duty” - essentially a pay-per-mile charge - from 2028, with EV drivers paying ~3p per mile and plug-in hybrid drivers 1.5p per mile.
In principle, charging motorists by usage rather than a flat fee or fuel purchase makes sense: petrol and diesel cars already effectively pay per mile via fuel duty, and EVs currently contribute far less to road tax revenues. With fuel duty income evaporating as we switch to cleaner cars, it’s clear the old system is unsustainable. The Treasury projects a £12 billion annual shortfall by 2040 if nothing is done. The new per-mile levy is intended to fill that gap, ensuring drivers “are taxed according to how much they drive, and not just by the type of car they own,” as Chancellor Rachel Reeves put it.
Yet for all its logic on paper, this policy has sparked major concerns among EV owners and experts. I’m not against road pricing in principle - a fair, usage-based system could ultimately benefit everyone. But the current plan’s details and timing stinks. It risks unfairly penalizing certain EV drivers, sending mixed signals about Britain’s clean transport goals, and even undermining the transition to electric mobility that is essential for our air quality and pollution reduction.
Some of the key issues:
Regressive impact on those without home charging - Drivers who rely on public chargers (often urban residents without driveways) already pay far more to run an EV, and a per-mile tax would hit them hardest.
Poor timing that could hurt EV adoption - Introducing this now, when EV uptake needs to accelerate, risks deterring buyers and feeding negative narratives during a crucial phase of the transition.
No incentive for efficiency - A 4-tonne electric truck pays the same per mile as a 1-tonne city car, despite causing 16x more road damage and using 3x more electricity.
Ignores the “polluter pays” principle - The scheme doesn’t sufficiently account for the external costs of petrol and diesel vehicles (pollution, carbon emissions). It could even make EV drivers pay more tax per mile than some heavily polluting car owners!
Lack of joined-up policy thinking - This EV tax clashes with other government measures. Grants for new EVs are extended (benefiting wealthier buyers) yet there’s no scrappage scheme to get old polluters off the road or support for used EV buyers.
Taxed for driving abroad - EV drivers would pay UK tax for miles driven in France or Ireland, something petrol drivers effectively do not.
The PHEV problem - The 1.5p/mile charge on plug-in hybrids creates perverse incentives and sends mixed messages.
A Regressive Hit on Drivers Without Driveways
In theory, everyone pays the same 3p/mile, but in practice it’s those who can’t charge at home who pay the increased marginal cost.
The numbers are stark. With a driveway and an EV tariff, you can charge overnight at 7p/kWh — roughly 2p per mile. Without one, you’re dependent on public chargers at 52–80p per kWh — 7 to 10 times more. At those prices, running an EV can cost more per mile than petrol. A Parliamentary briefing found 40% of households without off-street parking who switched to an EV in 2025 would have spent less sticking with petrol.
As Ginny Buckley from Electrifying.com puts it: “Running costs are no longer the incentive they once were — particularly for those reliant on public charging points, usually in poorer areas and without a driveway.” It doesn’t help that public chargers carry 20% VAT while home electricity is taxed at 5%.
Disproportionately, lower-income households do not have driveways. 60% of people in cities and town centres have no off-street parking, compared to just 17% in rural areas. The English Housing Survey shows the top income quintile is nearly five times more likely to have EV charge point access (14%) than the bottom (3%). Social renters — the lowest-income tenure — have just 6% EV ownership. The people least able to afford driveways are the same people who’d be hit hardest by this tax.
So a flat per-mile tax just makes it worse. Those already paying 60p+ per kWh see their costs rise further, while those charging at home at 7p/kWh barely notice. Mobility professor Graham Parkhurst calls it a “political timebomb” — a two-tier system dividing haves and have-nots. We should be making it easier for flat-dwellers to go electric, not piling on costs they can’t avoid.
Wrong Timing
EVs made up about 17% of new car sales in 2025, but the ZEV mandate requires 80% by 2030. We need sales to accelerate, not stall. So why introduce a tax that makes buyers think twice?
Ford, Auto Trader, and the AA have all spoken out. SMMT’s Mike Hawes called it “the wrong measure at the wrong time”. The OBR estimates ~440,000 fewer EV sales over five years as a result.
There’s real-world evidence of what happens when you get this wrong. New Zealand introduced a road-user charge for EVs last year while ending purchase incentives. EV market share collapsed from 19% to 4%. Iceland did similar but kept strong incentives — they saw only a small dip.
The messaging problem is just as bad. Tanya Sinclair from Electric Vehicles UK: “The Budget sends mixed signals… these measures together do not give drivers a consistent signpost that it supports cleaner road transport.” Meanwhile public sentiment on EVs remains sceptical, and a new tax is easily spun as “EVs losing their edge.”
Climate change isn’t waiting. Every delayed EV purchase means another petrol car on the road for years. Why tax the cleaner vehicles while the dirty ones still massively outnumber them?
No Incentive for Efficiency
Under this proposal, all EVs pay the same 3p/mile regardless of size, weight, or efficiency. A tiny city car and a 4-tonne monster pay identical tax.
Take the extremes. A GMC Hummer EV weighs 4,100 kg with a 212 kWh battery, achieving a dire 1.48 miles per kWh. Yes, it’s not sold in the UK, but bear with me. A Dacia Spring weighs under 1,000 kg with a 27 kWh battery, getting 4.5 miles per kWh — three times more efficient. The Leapmotor T03, now on sale here for around £15k, is similarly light at 1,175 kg.
Under this tax, all three pay exactly the same per mile, something you don’t see when comparing the fuel tax of a Kia Picanto and a Ford Ranger.
Road damage follows the “fourth power law” — double a vehicle’s weight and you get 16 times the road wear. A 4-tonne EV absolutely hammers the tarmac compared to a 1-tonne city car. The Hummer demands three times more electricity per mile, straining the grid more. It takes up more parking space, more road space, creates more congestion.
Yet none of this is reflected in the tax. We already differentiate VED by CO2 emissions for petrol cars — why not by weight or efficiency for EVs?
This is a missed opportunity to nudge buyers toward lighter, more efficient vehicles.
Ignoring “Polluter Pays”
Only EV drivers get a per-mile charge. Petrol and diesel drivers carry on paying fuel duty — which has been frozen for 14+ years and was extended again to 2026 in the same budget.
Right now, fuel duty plus VAT works out to about 7p per mile for petrol/diesel. EVs pay almost nothing. So yes, there’s a gap. But the solution here is not to slap 3p/mile on EVs while keeping fuel duty frozen.
As Polestar UK’s Matt Galvin put it: “It is farcical that fuel duty on cars burning petrol or diesel — contributing to respiratory diseases — has not been raised since 2011.”
You can even imagine scenarios where EV drivers pay more total tax. A high-mileage EV owner could pay £300+ in per-mile tax on top of ~£165 VED. Meanwhile someone with a 20-year-old diesel who drives sparingly might pay under £200 total. The zero-emission driver paying more than the polluter? That’s not what climate policy is supposed to look like.
Eventually all vehicles should probably move to road pricing — the cross-party Transport Select Committee recommended exactly that. But targeting EVs alone while giving petrol a pass feels politically expedient rather than fair. As the Social Market Foundation put it: “The simplest way to maintain that difference is to raise fuel duty.” Nobody wants to hear it, but they’re right.
Mixed Messages
Beyond these structural problems with the tax itself, the broader policy context makes things even more confusing.
The same budget that introduced this tax also extended the EV purchase grant to 2030, raised the expensive car threshold, and pledged £200m for charging infrastructure.
The grants benefit new car buyers who are of course generally wealthier. There’s no scrappage scheme, no support for used EV buyers. Used EV sales hit records in 2025 and the second-hand market is crucial for making EVs accessible. But someone buying a used EV gets no subsidy, doesn’t benefit from the expensive car threshold raise, and they still pay the per-mile charge.
As Tanya Sinclair noted: it’s ironic to “give a grant with one hand and introduce pay-per-mile with the other.” What’s the message? “Here’s £3,750 off your new car… and by the way, we’ll be charging you for every mile.”
Meanwhile, the tax loophole for pickup trucks finally closed this year. For years, heavy, high-emission Ford Rangers and Toyota Hiluxes enjoyed favorable company car treatment. That change went largely under the radar — no “war on ute drivers” headlines. Proof policy can shift behavior quietly. But it highlights how inconsistent we’ve been: subsidising polluting trucks for years while now taxing zero-emission vehicles.
The whole approach feels patchwork. No national scrappage scheme. No help for lower-income drivers going electric. No road pricing for petrol cars. Yet we’re charging ahead with taxing EV drivers — something no other motorists face. It would be much better to have a clear, consistent message: “EVs will always be cheaper to run. We’ll phase in road pricing for everyone fairly. We’ll help all drivers make the switch.”
Taxed for Driving Abroad
Under this plan, if you take your UK-registered EV to France for a holiday, you still pay 3p/mile to HMRC. Petrol drivers pay nothing to the UK when abroad — just local fuel taxes.
This is particularly awkward for people who regularly cross between Northern Ireland and the Republic. The government says it might offer “mitigations” later, but it highlights how poorly thought through the policy is.
Yes, this affects a minority. But it’s the principle. Why are EV drivers paying UK tax for wearing out French tarmac while the fuel duty freeze continues and petrol drivers going to the Côte d’Azur pay nothing extra? It just reinforces the sense that EV drivers are being singled out.
The PHEV Problem
Plug-in hybrids get their own confusing treatment. PHEVs pay 1.5p per mile on top of fuel duty — regardless of how much they actually drive on electric. Many PHEVs only manage ~20 miles on battery; beyond that they’re burning petrol.
So on long trips, PHEV drivers get double-taxed: fuel duty plus per-mile charge. This creates a perverse incentive. If you’re paying per mile anyway, why bother plugging in? The policy discourages the very behaviour we want — maximising electric mode use.
The 1.5p rate also sends mixed signals. Is a PHEV half as good as a BEV? Half as bad as petrol? The number seems arbitrary rather than based on any principle about emissions or road use. It’s another example of policy that looks neat on a spreadsheet but creates odd real-world consequences.
Conclusion
The need for road tax reform is real. Despite the onslaught of negative headlines, EV sales are growing, fuel duty revenue is slowing (albeit marginally). Usage-based taxation can be fair and effective in the long run. But targeting EVs alone, at this stage, in this manner penalises people doing the right thing and could discourage others from following.
A better path: a comprehensive road pricing system for all vehicles, with adjustments for emissions, weight, and perhaps congestion. Everyone pays for roads, polluters pay more. Several experts recommend this. Yes, it’s politically daunting. But it’s fairer than picking on one class of vehicle.
If that’s too much, the Resolution Foundation suggests applying the charge only to new EVs sold from 2028 — not retrospectively hitting existing owners. Pair it with even a small fuel duty rise to show this isn’t just about squeezing EV drivers.
And tackle the public charging cost disparity. Cut VAT on public charging to 5% to match domestic power. Accelerate on-street charger rollout. Consider scrappage schemes or used-EV grants. The transition only works if it’s inclusive.
Right now, EV drivers are seen as easy targets for revenue while gas guzzlers carry on as usual. That narrative is dangerous. I support road pricing in principle. But I want it done in a way that advances cleaner air, lower emissions, and equitable mobility — not a stumbling block on the road to a greener future.
The idea may be right. The execution and timing need to be right too.