Electric vehicle owners will have to pay a new tax of 3p per mile from 2028, Chancellor Rachel Reeves confirmed in the Autumn Budget today – marking the UK’s first dedicated mileage charge for zero-emission cars.
The measure is intended to offset a sharp decline in fuel tax revenue, which has fallen compared to last year as more drivers switch from gasoline and diesel to electric alternatives. The Treasury argues long-term changes are needed to protect public finances as the transport sector transitions to clean energy.
Shane Pither, electric vehicle expert at Select Car Leasing, said the announcement represents a significant shift in government policy – and will force many motorists to re-evaluate their running costs.
“Today’s announcement signals a remarkable shift in the sustainable transport market as the government begins to shift revenue focus away from petrol and diesel vehicles,” he said. “The Chancellor’s confirmation will understandably raise concerns among current electric vehicle drivers and those considering making the switch.”
Pither added that while the new fee has been long-awaited, it could feel high to motorists who hadn’t budgeted for additional per-mile costs. High-mileage drivers, in particular, may need to reconsider their financial assumptions about total cost of ownership.
He warned that the tax represents another hurdle for electric vehicle manufacturers, which are already struggling to convince hesitant consumers to adopt EVs, especially given concerns about upfront costs, access to charging and declining resale values.
However, Pither emphasized that fundamentals remain strong.
“Even with this future tax, electric vehicles remain a cost-effective and sustainable transportation option,” he said. “Drivers still benefit from low maintenance costs and increasingly competitive electricity rates. The long-term financial and environmental benefits of switching to electric vehicles have not changed.”
He added that the policy environment is likely to evolve as EV adoption increases: “Manufacturers need to be smart with their messaging and clearly communicate the overall value of EVs. This announcement should not deter potential buyers.”
The new tax is expected to result in billions of pounds in lost revenue over the next decade and is part of a wider restructuring of Britain’s road taxation as the car sector moves away from fossil fuels.
