The United Kingdom government has announced a significant shift in policy: electric vehicles (EVs) and plug-in hybrids will be subject to a per-mile road charge starting in April 2028. This marks the end of tax-free electric motoring, as the Treasury seeks a replacement for declining fuel duty revenue.
The New Road Charge System
Drivers of fully-electric cars will pay 3 pence (approximately $0.40 USD) per mile, while plug-in hybrid drivers will be charged 1.5 pence (around $0.20 USD) per mile. For a driver covering 8,500 miles annually, this translates to roughly £255 ($336 USD) in charges. While this is still lower than the fuel duty equivalent for combustion-engine cars, it represents a considerable change for EV and hybrid owners.
Revenue Projections and Expected Impact
The Office for Budget Responsibility (OBR) estimates this scheme will generate £1.1 billion ($1.45 billion USD) in its first year, potentially doubling within two years as EV adoption increases. However, the very introduction of this tax is expected to slow down EV sales as drivers reconsider the financial benefits of electric cars.
Implementation Details and Government Incentives
The exact method for tracking mileage remains undisclosed, though precedents exist in US states like Oregon and New Zealand. To mitigate the impact, the government is also raising the threshold for the “expensive car supplement” on Vehicle Excise Duty (VED) from £40,000 to £50,000, delaying higher road-tax surcharges for some EV models.
Furthermore, the EV grant scheme – offering subsidies up to £3,750 – will be extended to 2029-30, costing approximately £300 million per year. This combination of incentives and charges suggests a calculated attempt to balance revenue generation with continued support for EV adoption.
The UK’s move signals a wider trend: governments worldwide are grappling with how to fund infrastructure and services as traditional fuel taxes decline. This per-mile charging scheme may become a template for other nations as they transition away from fossil fuels.
