UK Government’s New Budget Might Include Pay-Per-Mile Tax for EVs
The UK government is reportedly reviewing a new pay-per-mile tax system for electric vehicles (EVs) as part of its upcoming 2025/26 budget — a move that could reshape how EV ownership is taxed in the coming years.
According to reports from Transport & Energy 'it follows long-running concern about the movement away from fuel duty as the UK transitions away from petrol and diesel vehicles, with a shortfall in revenue to the Exchequer.'
As the number of zero-emission vehicles on the road grows, the government is under increasing pressure to find a fair and sustainable replacement for lost petrol and diesel tax income.
Why Is the Government Considering a Pay-Per-Mile System?
At present, EV drivers pay no fuel duty and have previously benefited from zero road tax (VED) — though that exemption ended in April 2025. With this change approaching, the Treasury is now looking at ways to ensure that all road users contribute to the upkeep of the UK’s road network.
A pay-per-mile tax would charge drivers based on their vehicle usage rather than fuel consumption, potentially tracked through digital odometers or connected vehicle data. Early discussions suggest the rate could vary depending on:
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Vehicle type and emissions rating.
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Annual mileage.
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Road category (motorways, urban areas, etc.).
Analysts suggest the system could initially apply only to private and company-owned EVs, before expanding to include all zero-emission vehicles once the technology is in place.
How Could It Affect EV Drivers?
For most EV drivers, the impact will depend on how the tax is structured. While it’s intended to create parity between petrol, diesel, and electric vehicles, there are concerns it might slow down the UK’s EV adoption rate if not balanced with clear incentives.
Key potential effects include:
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Running Costs: Drivers with long daily commutes or high-mileage fleets could see increased costs compared to today’s tax-free driving.
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Urban vs Rural Fairness: Rural drivers who rely on longer journeys may be disproportionately affected.
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Incentives for Efficiency: The policy could encourage manufacturers and drivers to maximise range and charging efficiency.
However, experts also argue that a pay-per-mile system could be fairer overall — ensuring that those who drive more contribute proportionally, while still rewarding the environmental benefits of zero-emission vehicles.
What Has the Government Said So Far?
While no final policy has been confirmed, the Department for Transport (DfT) and Treasury are believed to be working with automakers, insurance firms, and telematics providers to explore how mileage could be tracked securely and transparently.
The Bigger Picture: EV Growth and Fair Taxation
As the transition to electric mobility accelerates, traditional fuel tax models are no longer viable. The challenge lies in creating a tax framework that supports road infrastructure while keeping EV ownership attractive.
Many industry experts are calling for balanced measures, such as continuing grants for electric vans, workplace charging incentives, and smart charging subsidies to offset any new taxation costs.
What EVwired Thinks
At EVwired, we understand that affordability and accessibility are key to making the EV transition a success. A fair, transparent pay-per-mile system could work — if it supports sustainable transport rather than discouraging it.
EV drivers have already invested in a cleaner future, and any new tax should reflect that commitment by funding better roads, charging networks, and green infrastructure across the UK.
Stay Future-Ready with EVwired
No matter how EV taxation evolves, one thing remains the same — the need for safe, efficient, and reliable charging. EVwired’s Type 2 EV charging cables are compatible with all major electric cars and vans, helping you charge smarter and more affordably wherever you park.
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Free fast-tracked UK delivery.
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5-year warranty for peace of mind.
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Weather-resistant IP55 design.
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Available in single-phase (7.4 kW) and three-phase (22 kW).
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Free carry case and connector caps included.
If mileage-based charging becomes reality, efficient home charging will be more important than ever — helping you manage energy use and keep running costs low.
While the UK government’s proposed pay-per-mile tax for EVs isn’t yet confirmed, it signals a major shift in how road use and clean transport may be funded in the years ahead.
Stay charged and stay informed. Explore more EV news and articles on the EVwired Blog.
