Electric vehicle (EV) owners in the UK will face a new 3p-per-mile tax starting in 2028, Chancellor Rachel Reeves confirmed in the Autumn Budget, marking the country’s first mileage-based charge for zero-emission cars.
The tax is aimed at addressing the sharp decline in fuel duty revenue as more drivers move away from petrol and diesel vehicles. The Treasury says the change is necessary to ensure public finances remain sustainable as the transport sector shifts toward clean energy.
Shane Pither, an EV specialist at Select Car Leasing, described the announcement as a significant policy shift that could prompt drivers to reassess the costs of owning an electric vehicle. “Today’s announcement signals a notable shift in the sustainable transport market as the government begins moving revenue focus away from petrol and diesel vehicles,” he said. “It will understandably raise concerns for current EV drivers and those considering making the switch.”
Pither noted that while the charge had been anticipated, it may come as a surprise for motorists who have not factored a per-mile cost into their budgets. Drivers who cover long distances could be most affected, he said, and some may need to reconsider financial calculations around total cost of ownership.
The announcement also presents a challenge for EV manufacturers who are already working to persuade consumers to adopt electric vehicles. High upfront costs, limited charging infrastructure, and concerns over resale values have been cited as barriers to uptake, and the new tax could add another consideration for potential buyers.
Despite these concerns, Pither stressed that electric vehicles remain financially and environmentally viable. “Even with this future tax in place, EVs will continue to offer cost-effective and sustainable transport options,” he said. “Drivers still benefit from lower servicing costs and increasingly competitive electricity tariffs. The long-term advantages of going electric have not changed.”
He added that as EV adoption continues to grow, government policies and industry messaging are likely to evolve. “Manufacturers will need to communicate the wider value of EVs clearly. This announcement should not discourage potential buyers.”
The per-mile charge is expected to generate billions of pounds in revenue over the next decade, helping offset the loss of traditional fuel duties. It forms part of a wider restructuring of UK road taxation as the country accelerates the transition away from fossil-fuel-powered transport.
Officials say the move signals a long-term strategy to maintain funding for road infrastructure while supporting the shift to zero-emission vehicles, ensuring the sustainability of both public finances and the automotive sector in the coming years.
