The UK government is reportedly considering a new pay-per-mile road pricing system somevehicle owners
Proposals that could dramatically alter how UK motorists pay for road use have received fresh momentum. Speculation is mounting that a 3p per mile levy on electric vehicles from 2028 might be unveiled in the forthcoming Budget.
Sources suggest the Treasury is addressing plummeting income as the surge in EV ownership has sent fuel duty collections tumbling. Motorists clocking up 8,000 miles each year could be hit with an additional £240 annual bill if the per-mile system gets the green light.
Electric cars already lost their vehicle excise duty (VED) exemption back in April. And the plans reportedly being drawn up by Chancellor Rachel Reeves received a boost from research firm Stonehaven, which polled 2,249 British adults and found 71% believe EV drivers should contribute at least some tax for road use, with just 14% saying they shouldn’t pay anything.
Backing for an electric vehicle levy grows when people can see tangible advantages, the study revealed. Around 61% of those questioned would back an EV tax if it went towards better charging networks, jumping to 83% if the money tackled Britain’s pothole crisis.
The polling also showed 47% think EV taxation should help slash public charging costs, though 16% opposed this idea.
Stonehaven’s briefing paper cautioned that Chancellor Rachel Reeves confronts a “wicked problem” as electric vehicle taxes risk dampening demand for the cars, ultimately hitting revenue targets.
The consultancy urged establishing a “right to home charge”, slashing public charging fees, and introducing reduced tax rates for current EV owners. Michael Dnes, Stonehaven’s head of transport policy and a former senior official in the Department for Transport, said: “This polling shows the public are open to a fair deal on EV taxes. But making that deal fair will take some work.
“Right now, there are big differences in how easy it is to go electric, and the system favours people who own a house with a driveway.
“Others can pay 10 times as much to fill the same battery. If the Government wants to impose a new tax while raising sales, it needs new measures to grow the market. More than 10 million homes are frozen out of cheap charging – and that can be fixed.”
Motorists with petrol and diesel cars currently pay duty when purchasing fuel, whilst electric vehicle drivers have managed to dodge such charges.
The Office for Budget Responsibility states that standard petrol and diesel duties stand at 52.95p per litre – a cost drivers face at filling stations on top of VAT.
A recent parliamentary written question has enquired about the potential consequences of introducing pay-per-mile pricing, without limiting it to electric vehicles alone – including petrol and diesel cars.
Conservative MP Richard Holden questioned Rachel Reeves: “What assessment she has made of the potential impact pay-per-mile road pricing on (a) rural motorists, (b) low-income drivers and (c) small businesses.”
Exchequer Secretary to the Treasury Dan Tomlinson has now responded that the system was ‘under review’ with any changes to be announced at ‘fiscal events’: “Fuel duty is projected to raise £24.4bn in 2025/26 and will remain in place. At Autumn Budget 2024, the Government announced continued support for people and businesses by extending the temporary 5p fuel duty cut and cancelling the planned increase in line with inflation for 2025/26.
“The Chancellor meets with her Ministerial colleagues on a regular basis to discuss a wide range of issues. The Government keeps the tax system under review, with changes announced at fiscal events.”
Chancellor Rachel Reeves is expected to unveil plans for a 3p per mile levy on EVs when she delivers her November 26 Budget, the Daily Telegraph reported. The proposal is set to come into force in 2028 following consultation, and would hit EV drivers with an average annual bill of £250, according to the newspaper.
Motoring organisations voiced fears that such a charge could deter some people from making the switch to electric vehicles. The Treasury is grappling with declining fuel duty revenues as more motorists abandon petrol or diesel cars for EVs.
Fuel duty generated just under £25 billion in the 2024/25 financial year. Previous administrations have deemed the introduction of per-mile driving charges – sometimes called road pricing – too politically damaging to pursue.
Motorists who clock up more miles will need to top up their payments, while those who drive less could see some of the money carried over to the following year. To give you an idea, a 3p per mile fee would equate to £12 for a journey from London to Edinburgh, £5 from Cambridge to Bristol, and £2 from Liverpool to Leeds.
A Government spokesperson explained: “Fuel duty covers petrol and diesel, but there’s no equivalent for electric vehicles.
“We want a fairer system for all drivers whilst backing the transition to electric vehicles, which is why we have invested £4 billion in support, including grants to cut upfront costs by up to £3,750 per eligible vehicle.
“Just as it is right to seek a tax system that fairly funds roads, infrastructure and public services, we will look at further support measures to make owning electric vehicles more convenient and more affordable.”
Edmund King, president of the AA, acknowledged that the Treasury faces losing fuel duty revenue, but urged the Government to “tread carefully” to avoid slowing the transition to EVs.
He said: “We need to see the detail of this proposal to ascertain whether these new taxes will be equitable or a poll tax on wheels.”
Steve Gooding, director of the RAC Foundation, has warned that the Treasury’s “fuel duty cash-cow” is nearing its end. He suggested: “If the Chancellor is tempted to go down the route of introducing a distance charge for EV drivers but still encourage EV take-up, then she needs to look at how to cut the cost of public charging for the millions of people who don’t have the option to charge their cars at home.”
Recent YouGov polling indicates that Brits are generally in favour of a pay-per-mile tax for electric vehicles (EVs). A survey conducted on 6 November with 5,833 adults across Great Britain revealed that 43% either “strongly support” or “somewhat support” the idea, while 34% either “somewhat oppose” or “strongly oppose” it.
A further 23% responded with “don’t know”.
Interestingly, YouGov’s data also suggests that older individuals are more likely to back the proposal than younger ones.
Update on UK’s new pay-per-mile road plans.
