“Road Tax” for Electric Vehicles in the UK: Pay-Per-Mile System to be Implemented

Metaverse Planet November 27, 2025Last Updated: November 27, 2025

2 minutes read

The UK is increasing electric vehicle incentives until 2030, but on the other hand, it is introducing a new financial burden with a pay-per-mile tax for electric vehicles and plug-in hybrids starting from 2028.

Government Plans and Budget The UK government has announced plans to allocate an additional £1.3 billion for electric vehicle incentives and extend the program until 2030. At the same time, a new pay-per-mile tax will be applied to electric vehicles and plug-in hybrids starting from 2028.

Last week, some media outlets announced that the government planned to allocate an additional budget for EV incentives based on leaked information. This information was confirmed when the official budget plan was presented: £650 million had been allocated for the 2025–2028/2029 fiscal year during the summer period; with the new addition, the total incentive budget rises to just under £2 billion. Additionally, £200 million in extra support will be provided for charging infrastructure.

Currently, the UK provides incentives of up to £3,750 per vehicle for electric vehicles with a list price of up to £37,000. With the new additional budget, the amount and duration of these supports will be increased, though details have not yet been clarified. Charging infrastructure and corporate electric vehicle fleets will also benefit from the incentives. With tax advantages, the installation of charging points will become more attractive.

Incentives on One Hand, Tax on the Other

In addition to incentives, consumers will face a new kilometer-based tax known as Electric Vehicle Excise Duty (eVED) starting from 2028. The annual cost for electric vehicle owners will increase by an average of £276. Plug-in hybrid owners will also be affected by this tax, but since they are already subject to fuel duty, the impact will be slightly lower.

The pay-per-mile tax will be the equivalent of fuel duty applied to petrol and diesel vehicles. The new tax will be applied as 3 pence per mile for electric vehicles and 1.5 pence per mile for plug-in hybrids. According to estimates, the treasury expects to generate £1.1 billion in revenue from this tax in the 2028/29 fiscal year, and £1.9 billion in 2030/31.

In the government’s statement, it was noted: “All vehicles contribute to the wear and tear of our roads. Therefore, electric vehicle ownership will be kept attractive with a small pay-per-mile tax.”