A per per mile electric vehicle tax has been suggested for this November’s budget, which probably means additional costs for all EV drivers. Use the pay per mile calculator below to see how much this cost you per day, week, month, and year:

Last updated: 11 November 2025

Pay per mile calculator features

• Instant cost breakdown – See your estimated daily, weekly, monthly and yearly road tax costs in real-time
• Vehicle type presets – Quick selection between electric vehicles (3p/mile), hybrids (2p/mile), or custom rates for flexibility
• Interactive sliders – Easily adjust your average daily mileage with intuitive slider controls
• Annual mileage projection – Automatically calculates your yearly mileage based on daily driving habits
• Comprehensive comparison table – Compare costs across common annual mileages from 5,000 to 20,000 miles

Pay per mile road tax for electric cars

The UK government is contemplating a significant shift in how motorists are taxed, with proposals for a pay-per-mile charging system that could fundamentally change the cost of running an electric vehicle. As the nation accelerates towards its net-zero ambitions, policymakers face a growing dilemma: how to replace the billions of pounds in fuel duty revenue that will evaporate as petrol and diesel cars disappear from our roads.

The looming revenue crisis

For decades, fuel duty has been a reliable cash cow for the Treasury, generating around £25 billion annually. But as electric vehicle adoption accelerates, with projections suggesting six million EVs on British roads by 2028, this income stream is rapidly drying up. The government has already begun plugging the gap by extending Vehicle Excise Duty to electric vehicles from April 2025, but this won’t be enough to offset the losses. Enter the pay-per-mile proposal, a usage-based taxation model that could arrive as early as 2028.

The timing is deliberate. Chancellor Rachel Reeves is expected to outline the consultation process in the November 2025 Autumn Budget, giving the government several years to refine the scheme before implementation. This phased approach suggests lessons have been learned from previous botched policy rollouts, though whether the extra time will smooth public acceptance remains to be seen.

Understanding the proposed charges

Current speculation centres on a 3p per mile levy for fully electric vehicles, with hybrid vehicles facing a lower, yet-to-be-determined rate. While this might sound modest, the cumulative effect is substantial. For context, the average British driver covers approximately 7,400 miles annually, which would translate to £222 in additional taxation under this system. More frequent drivers would feel the pinch even harder.

These figures become particularly eye-watering when combined with the existing VED that EV owners now face. Someone driving 12,000 miles annually could be looking at around £550 in combined taxation—a far cry from the running cost advantages that initially made electric vehicles attractive.

Regional impact and fairness concerns

The pay-per-mile model raises thorny questions about geographical equity. Rural drivers, who often lack public transport alternatives and must travel greater distances for work, shopping, and services, would bear a disproportionate burden. A farmer in Northumberland covering 15,000 miles annually would pay £450, while a city dweller in Manchester with excellent public transport links might drive just 5,000 miles and pay £150.

This disparity could inadvertently punish those who’ve already made the environmentally conscious choice to switch to electric vehicles, particularly in areas where EV adoption has been strongest. Scotland, which has some of the UK’s most remote communities, could see residents facing bills that dwarf those of urban counterparts.

Implementation challenges

Perhaps the most contentious aspect of any pay-per-mile scheme is enforcement. The government faces a delicate balancing act between effective monitoring and privacy concerns. Unlike fuel duty, which is collected invisibly at the pump, distance-based taxation requires active measurement of vehicle usage.

The most straightforward option—annual mileage declarations verified at MOT—seems likely. This approach mirrors systems already used for company car taxation and would avoid the dystopian overtones of GPS tracking. However, it creates obvious loopholes. What stops drivers from simply underreporting their mileage? Will there be penalties for inaccurate declarations, and if so, how severe?

Some European countries have experimented with more sophisticated solutions. Switzerland’s system uses on-board units that automatically calculate charges, while Germany has trialled GPS-based tracking for commercial vehicles. But these approaches come with significant infrastructure costs and privacy implications that make them politically toxic in the UK.

International comparisons

Britain wouldn’t be pioneering this approach. New Zealand introduced per-mile charges for diesel vehicles decades ago and extended them to electric vehicles in April 2024 at roughly 5p per mile. The New Zealand government frames this as a fairness issue—ensuring all road users contribute to infrastructure maintenance regardless of their fuel type.

The Netherlands has gone further, announcing plans to replace traditional road tax entirely with a per-kilometre charge of 6-7p for all vehicles by 2030. This represents a more radical overhaul of the taxation system, treating road usage as a utility rather than applying differential rates based on vehicle type.

These international examples suggest the UK’s proposals are part of a broader global trend, but they also highlight the challenges. New Zealand’s system has faced criticism for administrative complexity, while Dutch proposals have sparked fierce political debate.

The industry’s perspective

Automotive manufacturers and trade bodies have reacted with alarm to the proposals. The Society of Motor Manufacturers and Traders argues that additional taxation on electric vehicles could undermine the government’s own zero-emission vehicle mandate, which requires 80% of new car sales to be electric by 2030.

Their concern isn’t unfounded. Electric vehicles already face a price premium compared to petrol equivalents, and many buyers are motivated primarily by running cost savings. If that financial advantage erodes through taxation, demand could stall precisely when the industry needs it to soar.

What happens next

The consultation process will be crucial in determining whether pay-per-mile becomes reality and in what form. Key questions remain unanswered: Will there be exemptions for low-income drivers or those in rural areas? How will hybrids be treated? What happens to classic cars or vehicles used sporadically?

Public opinion will likely prove decisive. While motorists might accept the principle of replacing lost fuel duty, they’ll expect fairness, simplicity, and guarantees that revenue will fund road improvements rather than disappearing into general taxation. The government’s challenge is crafting a system that feels equitable whilst generating the billions needed to maintain Britain’s road network in an electric future.

Additional reading:

• Electric vehicles: costs, charging and infrastructure (Gov)
• EV charging cost calculator (Top Charger)
• Society of Motor Manufacturers and Traders (SMMT) industry response