The Chancellor is reportedly considering a pay-per-mile charge for electric vehicle (EV) drivers, with a possible rate of around 3p per mile and implementation from 2028 following consultation. The measure, trailed in several outlets ahead of the Autumn Budget on Wednesday, 26 November 2025, is framed as a way to address declining fuel duty receipts as more motorists switch from petrol and diesel.
According to coverage citing Treasury thinking, EV drivers could pay a per-mile levy on top of existing motoring taxes. Reports suggest the charge might begin at about 3p per mile, equating to roughly £250 a year for an average private motorist. A formal consultation would precede any launch, with 2028 mentioned as the earliest start date. Precise scope, rates and exemptions remain unconfirmed at this stage.
Why now
Fuel duty currently applies to petrol and diesel but not to electricity used for home or public charging. As uptake of zero-emission cars rises, the Government faces a growing revenue gap when compared to internal combustion engine (ICE) motoring, where a typical driver contributes in the region of £600 per year through fuel duty. Several analysts and industry bodies have argued that some form of road-pricing is ultimately unavoidable to maintain a broad-based contribution from road users.
How it could work
Early reporting indicates a straightforward per-mile system rather than real-time tracking, with annual mileage used for assessment and plug-in hybrids potentially within scope at a different rate. Electric vans have been reported as likely to be excluded at first, though this has not been confirmed by the Government. Final design choices would depend on consultation outcomes, administrative practicality and the balance between revenue, fairness and incentives for uptake.
What EV drivers already pay
EVs are no longer exempt from Vehicle Excise Duty (VED). From 1 April 2025, new zero-emission cars pay £10 in the first year and the standard rate of £195 from the second year. Many EVs with a list price above £40,000 are also liable for the Expensive Car Supplement for five years. For company cars, favourable Benefit-in-Kind (BiK) rates continue, with fully electric cars at 3% for 2025/26, scheduled to rise gradually in later years.
At a headline 3p per mile, the annual impact on a typical private EV driver has been estimated at about £250 based on average mileage assumptions. Even with a mileage levy, several analyses suggest EVs would generally remain cheaper to run than petrol equivalents due to lower fuelling and maintenance costs, although the differential narrows. For fleets, the continuing BiK advantage is material, but operators may wish to review total cost of ownership models and mileage policies once details are confirmed.
Industry reaction
Automotive groups and leasing providers have raised concerns that introducing a new charge at a “pivotal” point in the transition could dent EV demand, especially given current pressures on upfront prices and public charging availability. Others argue that setting expectations now, signalling gradual implementation and maintaining clear incentives could provide stability while protecting revenues.
If the Chancellor confirms plans to consult on a per-mile EV levy, further detail would be published in accompanying documents, with draft legislation and timings to follow the consultation process. Businesses and motorists should monitor the Budget announcements and any subsequent technical papers closely to understand scope, compliance steps and transitional rules.
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