The UK government plans to introduce a pay-per-mile tax for electric vehicles starting April 2028, charging EV drivers 3 pence per mile to offset lost fuel duty revenue. This could reduce EV sales by 440,000 units and generate £1.4 billion by the decade’s end, amid concerns from automakers about hindering the green transition.
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UK EV tax details: 3p per mile for fully electric cars, 1.5p for plug-in hybrids from 2028.
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Policy addresses declining fuel duty as EV adoption grows, with fuel tax frozen for another year.
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Projected impact includes £255 annual cost for typical 8,500-mile EV driver by 2028-2029.
Discover the UK’s new EV pay-per-mile tax starting 2028 and its impact on drivers and sales. Learn how this affects the electric vehicle transition and what automakers say. Stay informed on policy changes shaping sustainable motoring.
What is the UK’s new pay-per-mile tax for electric vehicles?
The UK’s new pay-per-mile tax for electric vehicles will require EV and plug-in hybrid owners to pay based on distance traveled starting April 2028. This measure aims to compensate for revenue losses from declining fuel duty as more drivers switch to zero-emission cars. Fully electric vehicle drivers will face a rate of 3 pence per mile, while plug-in hybrid users will pay 1.5 pence per mile, according to projections from the Office for Budget Responsibility.
How will the EV tax affect annual costs for drivers?
The introduction of the pay-per-mile tax could significantly increase costs for EV owners. For a driver covering the average annual mileage of 8,500 miles, the bill for a fully electric vehicle would amount to approximately £255 in the 2028-2029 tax year. This calculation, based on the 3 pence per mile rate, highlights the financial burden on households adopting greener transport options. The Office for Budget Responsibility estimates that the policy will generate £1.4 billion in revenue by the end of the decade, helping to bridge the fiscal gap left by frozen fuel duties and rising EV adoption. Automakers and industry experts have raised alarms, noting that such charges could deter potential buyers at a pivotal stage in the shift to sustainable mobility. For instance, the Society of Motor Manufacturers and Traders has emphasized the need for policies that support rather than penalize the EV market. Supporting data from recent sales trends shows that without incentives, uptake might stagnate, as seen in comparative European markets where affordability drives growth.
Frequently Asked Questions
When does the UK EV pay-per-mile tax start and who does it apply to?
The UK EV pay-per-mile tax begins in April 2028 and applies to all fully electric vehicle owners at 3 pence per mile, as well as plug-in hybrid drivers at 1.5 pence per mile. This targets the growing number of zero and low-emission vehicles to maintain road funding, as outlined in recent budget announcements from the government.
Will the new EV tax slow down electric car sales in the UK?
Yes, the new EV tax is expected to impact sales, with the Office for Budget Responsibility forecasting a reduction of about 440,000 electric vehicle units over time. Industry leaders like the Society of Motor Manufacturers and Traders warn it could undermine demand, especially as Europe sees steady growth in affordable EV models. This policy might make electric driving less appealing compared to traditional options, potentially delaying the UK’s net-zero goals.
Key Takeaways
- Revenue replacement strategy: The tax addresses a shortfall in fuel duty collections, projected to raise £1.4 billion by 2030 while fuel taxes remain frozen.
- Industry backlash: Automakers, including Ford and charging networks like InstaVolt, argue the timing discourages EV adoption during a critical transition phase.
- European contrast: While the UK faces sales hurdles, Europe’s EV market grew 4.9% in October, led by affordable models from BYD overtaking Tesla.
Conclusion
The UK’s impending pay-per-mile tax for electric vehicles from April 2028 marks a significant shift in road funding, balancing fiscal needs against the push for sustainable transport. As EV tax details emerge, including the 3 pence per mile rate, drivers must weigh rising costs against environmental benefits. Industry voices, such as Ford’s UK chair Lisa Brankin and the Society of Motor Manufacturers and Traders’ Mike Hawes, underscore the policy’s potential to confuse the electric vehicle transition. With Europe advancing through affordable options and strong sales from players like BYD, the UK risks falling behind unless supportive measures are prioritized. Policymakers should collaborate with stakeholders to refine this approach, ensuring the road to net-zero remains viable for all. For the latest on mobility policies, keep an eye on evolving government strategies that could shape your driving choices in the coming years.
