If you have been thinking about switching to an electric vehicle (EV) or plug-in hybrid (PHEV), you may have heard about the proposed Pay Per Mile tax that the government is planning to introduce in April 2028.
Understanding these pay per mile car tax changes will help you compare the real long-term cost of electric driving.
Below, we explain how the pay per mile tax scheme works and how it might affect you.
The pay per mile road tax is a new system that will charge EV and hybrid drivers based on how far they drive.
From April 2028, electric vehicle drivers will pay 3p per mile, while plug-in hybrid drivers will pay 1.5p per mile. The scheme will form part of a new system known as Electric Vehicle Excise Duty (eVED).
This charge will be paid alongside the Vehicle Excise Duty (VED).
The pay per mile tax is being introduced to help alleviate the shortfall that the government faces with regard to motor tax revenue.
With drivers of petrol vehicles currently paying an average of £600 a year, fuel duty currently contributes billions of pounds to the Treasury. But as more drivers switch from petrol and diesel cars to electric and hybrid cars, income from tax on fuel has been declining.
The new pay per mile tax is designed to address this issue while still keeping EV ownership cheaper than running a petrol or diesel car.
The system is a usage-based tax rather than a flat annual cost, so the more you drive, the more you contribute.
The pay per mile road tax will be calculated using a mileage-based rate:
These rates are expected to increase gradually in line with inflation over time.
Plans have not yet been formalised; however, it is proposed that the government is likely to integrate the pay per mile tax into the existing DVLA Vehicle Excise Duty payment system that is used to pay road tax. As an EV or hybrid driver, you will:
If you own an EV or hybrid vehicle, you will need to pay the new tax as of April 2028.
However, the impact may be smaller than expected: For the average UK driver covering around 8,000 miles per year, the new mileage charge would add roughly £240 per year to motoring costs.Even with a pay-per-mile road tax, EVs are still expected to be significantly cheaper to run than petrol or diesel cars.
Typical running cost comparison:
The biggest factor will be how much you drive, as higher mileage will naturally increase the total cost.
The pay per mile car tax changes will only affect certain hybrid vehicles.
Current proposals suggest that mileage data will be collected through annual odometer readings during MOT tests and/or self-reported mileage estimates.
Any overpayments or underpayments would likely be adjusted in the following year, with the balance rolled over accordingly.
No. The new pay per mile system will not replace standard Vehicle Excise Duty (VED).
Instead, the pay per mile road tax will be an additional charge applied to electric and plug-in hybrid cars from 2028.
Drivers will continue to pay the usual annual VED amount, with the mileage charge added on top.
While the pay per mile tax introduces an additional cost for electric vehicles, EVs are still expected to remain significantly cheaper to run than petrol or diesel vehicles.
With the policy not due to take effect until April 2028, drivers can continue to benefit from the current lower running costs for a couple more years.
At Foray Motor Group, we offer a wide range of electric and hybrid vehiclesto suit every driver. Visit one of our showrooms to speak with our team about the benefits of electric driving and take your favourite model for a test drive.
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