The potential introduction of a pay-per-mile charging scheme for electric vehicles (EVs) in the UK is under discussion, with Chancellor of the Exchequer Rachel Reeves expected to announce details in an upcoming budget. The proposal includes a charge of three pence per mile for EVs, with speculation that it could be implemented by 2028 on top of the existing annual road tax or vehicle excise duty (VED). This initiative arises amid concerns regarding declining motoring tax revenues as traditional fuel duties diminish with the increasing adoption of EVs.
Current estimates indicate that battery electric cars could average approximately 8,900 miles annually in 2024, which would generate substantial revenue if the proposed fee is enacted. The Treasury has signaled that some form of charge will be included in the budget, although the specifics remain unclear. The transport secretary, Heidi Alexander, clarified that a national road pricing scheme is not being considered, although a mileage-based charge for EVs is still on the table.
The transition to electric vehicles has complex implications for the UK’s mobility tax system. As petrol and diesel cars contribute to tax revenues through fuel consumption, a sustainable replacement model for emerging EV use is necessary. The government aims to balance maintaining revenue while supporting the shift to electric vehicles.
Opposition to potential pay-per-mile fees exists, primarily due to concerns that such charges may deter consumers from adopting electric vehicles. This concern is echoed by various stakeholders, including car manufacturers and associations, who caution against the timing of these new charges during a critical transition phase.
Critically, international examples, particularly from New Zealand, and insights from economists suggest the need for careful implementation. A proposed EV charge could affect market dynamics and consumer perceptions, prompting calls for clear governmental intent in messaging about support for EV adoption. Ultimately, discussions emphasize the necessity of developing an equitable and effective taxation system suited to the evolving automotive landscape.
Source: https://www.theguardian.com/environment/2025/nov/22/pay-per-mile-electric-vehicles-rachel-reeves-road-taxes