Electric Car Drivers Face New Pay Per Mile Tax in Autumn Budget

Electric vehicle owners across the United Kingdom are set to encounter a significant shift in motoring costs, as the government prepares to unveil a new pay-per-mile tax in the forthcoming Autumn Budget. Chancellor Rachel Reeves is expected to outline the measure on 26 November, with plans for it to come into effect from 2028 following a consultation period.

Under the proposal, electric car drivers will be charged 3p per mile, an addition to other existing road taxes such as Vehicle Excise Duty. The average electric vehicle owner could face an extra annual outlay of £250, as the Treasury confronts diminishing fuel duty revenues due to the transition from petrol and diesel to electric cars. By the time the scheme begins, projections estimate up to six million electric vehicles will be on British roads.

The pay-per-mile charge will operate differently to prior road-pricing models. Rather than real-time electronic tracking, drivers will estimate their anticipated mileage for the year and pay accordingly, with underused miles carrying over and excess billed in arrears. For long journeys, this amounts to an additional £3 from Cambridge to Oxford and £12 from London to Edinburgh. Hybrid vehicle owners will also be affected, albeit at a reduced per-mile rate.

Ministers are positioning this move as one of equity, referencing the average £600 in annual fuel duties currently paid by petrol car drivers. The Treasury estimates this reform will generate £1.8 billion by 2031, supporting British public finances as the loss from fuel duty revenues mounted by continued electrification of transport. It is anticipated that fuel duty receipts could decline by £12 billion by 2040 as petrol usage drops.

Questions remain around enforcement and the potential administrative burden on motorists. While no mass surveillance or electronic monitoring is proposed presently, the Driver and Vehicle Licensing Agency will be responsible for oversight, likely using mileage estimates and spot checks linked with existing motoring databases. The government will continue to shape incentives for electric vehicles alongside the tax’s introduction in an attempt to balance carbon reduction goals with sound fiscal management.

Opposition parties have criticised the move, labelling it a tax raid on working families already facing high living costs. Political debate is set to intensify as the Budget approaches, with the broader implications for road taxation systems and the future of motoring policy under scrutiny.