Electric vehicle owners to face pay-per-mile tax

Pritti MistryBusiness reporter bbc.com/news/articles

A new tax for electric vehicles and some hybrid vehicles has been announced by the chancellor in the Budget.

From April 2028, electric car drivers will pay a road charge of 3p per mile, while plug-in hybrid drivers will pay 1.5p per mile, with the rates going up each year with inflation.

The new tax is about „half the fuel duty rate paid by drivers of petrol cars”, according to the government’s independent forecaster, the Office for Budget Responsibility (OBR).

The chancellor also committed to extending the 5p cut in fuel duty until September next year, after which it is set to increase annually by the RPI measure of inflation.

How will pay-per-mile work?

Drivers will pay the charge based on how many miles they drive from April 2028.

Motorists will have their mileage checked annually, typically during their MOT as is already the case, or for new cars, around their first and second registration anniversary, the Treasury said.

Payment will be integrated into the existing Vehicle Excise Duty system that is administrated by DVLA.

Under the measures, an electric car driver clocking up 8,500 miles in the 2028-29 financial year is expected to pay about £255 – about half the cost per mile that petrol and diesel drivers pay in fuel tax.

However, mileage readings will be based on in-vehicle odometers, which the government acknowledges can be subject to tampering, or „clocking”. It recognises that the introduction of the tax „may increase the likelihood of motorists choosing to clock their vehicles”, and said it was looking at ways to mitigate this.

The government is now consulting on exactly how the scheme will work.

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