The Treasury is reportedly considering a pay-per-mile levy for electric vehicles (EVs), set at around 3p per mile, as part of the 26 November Budget, according to multiple briefings.
The charge, which would be subject to consultation and could start in 2028, is framed as a replacement for eroding fuel-duty revenues as the fleet electrifies.
Early estimates suggest the average private EV driver might pay roughly £250 a year, with hybrids potentially subject to a lower rate.
Officials argue that a distance-based charge would help stabilise receipts that currently fund public services and the road network as petrol and diesel sales decline.
The reported design would rely on drivers declaring expected annual mileage and settling differences later, rather than live tracking or new in-vehicle hardware, a choice intended to ease privacy concerns and reduce set-up complexity.
Industry and motoring bodies warned ministers to calibrate the policy carefully to avoid stalling the transition.
The AA said any EV-only levy risked being perceived as a “poll tax on wheels” and urged the chancellor to “tread carefully”, noting persistent barriers to uptake.
The Society of Motor Manufacturers and Traders separately cautioned that recent tax changes are already weighing on new-car demand and that consumer incentives remain critical as the market navigates tighter zero-emission sales targets.
Advocacy groups also stressed equity. EVA England pointed to a growing “charging divide” between drivers with and without off-street parking, where reliance on higher-priced public charging inflates running costs.
Vicky Edmonds, CEO of EVA England, said: “This is the wrong time to bring in further costs for EV drivers. Our survey data shows that at least half of drivers are still finding the upfront purchase costs of these vehicles to be too high, and that half of EV drivers without driveways are finding their vehicles more expensive to run than their former petrol and diesel cars.
“These challenges to switching to electric must be addressed urgently, and before any scheme that suggests additional costs is considered.”
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Recent EVA England research highlights that drivers dependent on public charging can face per-mile energy costs several times higher than those able to charge at home.
Think-tanks have long urged a shift to road pricing. The Tony Blair Institute has modelled a staged approach starting at 1p per mile for cars and vans, rising over time to keep revenues stable as EV penetration grows.
Campaign for Better Transport has likewise called for a national scheme that could evolve from a simple flat rate toward smarter charging that varies by vehicle and place to support congestion and air-quality goals.
Policy design will be pivotal for cities. A standalone, EV-only national levy risks overlapping with London’s ULEZ, England’s CAZs and local tolls if integration is not managed, potentially creating double-charging and user confusion.
The Treasury’s preferred collection model and its plans to interface with DVLA records, MOT mileage data and existing enforcement technologies have not yet been set out publicly.
Since April 2025 EVs have paid VED for the first time, while many drivers reliant on public charging still face a 20% VAT rate at the plug versus 5% for home electricity – a disparity campaigners say penalises those without driveways.
Any new per-mile levy would land on top of that landscape unless ministers address the VAT gap and charging affordability in parallel.
The chancellor, Rachel Reeves, is expected to confirm whether a consultation will proceed when she delivers the Budget on 26 November.
Transport and city stakeholders will watch for clarity on rate setting, exemptions, appeals and how any national scheme would align with local road-user charges and clean-air frameworks.
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