The UK government has confirmed it will introduce pay-per-mile road charges for electric vehicles (EVs) from 2028. The move, announced by the Treasury, aims to ensure motoring taxes remain sustainable as the number of zero-emission vehicles rises and traditional fuel duty revenues decline.
The policy has attracted debate, with government officials highlighting long-term fiscal stability, while industry experts have questioned the impact on electric vehicle uptake and the wider goal of decarbonising transport.
Policy announcement
During a recent debate in the House of Lords, the Financial Secretary to the Treasury, Lord Livermore, affirmed the government’s commitment to extending motoring taxes to electric vehicles through a new per-mile levy.
According to officials, the new scheme is scheduled to apply from 2028 and is intended to close the widening gap in road taxation created by the transition away from fossil-fuel powered vehicles.
Discussing the policy, government representatives stated that previous administrations declined to tackle the issue, but that the current government is addressing it in order to maintain stable public finances. This is a decision that people have talked about for many years,' said Lord Livermore in Parliament.
Treasury’s rationale
The decision comes as fuel duty revenues continue to shrink amid accelerating sales of electric cars. Treasury officials argue that extending taxation to EVs will address the fiscal imbalance and secure funding for the upkeep of road infrastructure.
Recent forecasts suggest that, without policy changes, public revenue from motoring will face a significant shortfall as internal combustion engine (ICE) vehicles are phased out.
Industry response
The introduction of a proposed £0.03-per-mile charge for electric vehicles has raised concerns within the automotive and energy sectors. John Murray, Head of Electric Vehicles at LCP Delta, warned that such a measure could discourage consumers from switching to electric cars at a critical time in the market’s development.
'This poses a serious risk to the industry. It makes the switch to electric vehicles less attractive and risks hardening public scepticism at a critical moment for mass adoption,' Murray said.
He added that, according to his organisation’s forecasts, more than 3.2 million fully electric cars will be on UK roads by April 2028, with each averaging 8,500 miles a year.
This would generate approximately £820 million in revenue annually roughly half the sum that would be raised if those miles were driven in petrol or diesel cars subject to current fuel duty rates.
Fiscal and environmental context
The switch to electric vehicles is central to the UK’s decarbonisation strategy, considered vital for meeting climate targets. Critics argue that a new running cost for EVs could slow down the growth of zero-emission vehicle adoption and undermine efforts to reduce carbon emissions from transport.
Murray highlighted that introducing such charges risks making internal combustion and plug-in hybrid vehicles appear more financially attractive, potentially contradicting the government’s stated environmental ambitions.
Debate over fuel duty
Some industry figures have advocated for a continued focus on adjusting fuel duties for fossil-fuelled vehicles rather than introducing new levies for electric vehicles.
The government’s temporary 5p per litre cut to petrol and diesel duty, implemented in 2022, is due to end in March 2026.
Observers argue that an inflation-linked increase in fuel duty, which has been frozen for over a decade, could have preserved government revenues and strengthened incentives to switch to electric vehicles, without discouraging adoption.
Final Summary
In summary, the government’s announcement of a pay-per-mile charge for electric vehicles from 2028 marks a major shift in road taxation.
While the Treasury regards the policy as crucial for maintaining fiscal sustainability in the face of declining fuel duty, there is considerable concern within industry that the move may slow the UK’s progress towards its climate commitments.
The debate is set to continue as stakeholders examine the details and potential long-term impact on both motorists and the wider economy. For those interested in keeping track of future tax and transport changes, the Pie app provides timely updates and expert insights.
