Electric Car Owners to Pay Tax Based on Usage
Electric Car Owners to Pay Tax Based on Usage
With the increasing use of electric vehicles, the UK has decided to implement a new scheme charging drivers per mile. Accordingly, electric car owners will pay tax based on their usage.
The new system will begin in April 2028. Electric vehicle drivers will be charged 3 pence per mile, while plug-in hybrid users will be charged 1.5 pence per mile. The charges will be updated annually based on inflation.
The government announced that the 5 pence reduction in fuel duty has been extended until next September, after which inflation-linked gradual increases will be applied.
THIS IS HOW THE PAYMENT SYSTEM WILL WORK
Mileage information will be recorded each year during official MOT checks. This data will be processed through the DVLA's existing Vehicle Excise Duty system for collection. The Treasury reported that an electric car owner driving 13,680 miles in the 2028-29 period will pay approximately £255 in tax.
It is stated that this amount is roughly half of the per-mile taxes paid by petrol and diesel vehicles. Authorities predict the regulation could generate £1.1 billion in revenue in the 2028-29 period and £1.9 billion in the 2030-31 period.
On the other hand, it is noted that demand could fall due to the increase in the lifetime cost of electric vehicles.
INDUSTRY BACKLASH GROWS
The decision has brought criticism from the automotive sector. Ford and SMMT (Society of Motor Manufacturers and Traders) described the regulation as "a wrong move at the wrong time." Statements indicated that the government's messaging regarding the transition to electric vehicles was causing confusion.
The Renewable Energy Association called for a fairer model that covers all vehicle types and considers environmental impacts. InstaVolt CEO Delvin Lane stated that users without access to home charging already pay more at public charging stations, and that rural areas and low-income groups would be disproportionately affected by this tax. Lane said collaborative work is needed for a fairer and more sustainable system.
AA President Edmund King also stated that the government must strike the right balance between funding road infrastructure and not slowing down the transition to electric vehicles.
ONLY VEHICLES REGISTERED IN THE UNITED KINGDOM WILL BE COVERED
The new tax will only apply to electric vehicles registered in the United Kingdom. Vehicles registered abroad but used in the UK will be exempt from the scheme.
As the sale of new petrol and diesel cars will be banned from 2030 onwards, all new vehicles will need to be electric or hybrid. This situation has led to commentary that the per-mile tax could reduce the appeal of electric vehicles.
