This change follows earlier adjustments to Vehicle Excise Duty (VED) in April 2025, which ended the long-standing exemption for EVs. Most electric vehicle drivers now face an annual VED charge of £195, closing a gap that once incentivised zero-emission driving.
Government Responds to Fuel Duty Losses
The move to a mileage-based taxation system has been framed as a necessary response to the decline in fuel duty revenue, a direct result of the UK’s ongoing shift towards electric mobility. According to the Department for Transport, the decline in petrol and diesel vehicle use has created a funding gap in infrastructure and maintenance, traditionally supported by taxes on fuel.
A driver of a fully electric car covering the national average of 8,500 miles per year would pay £255 under the new rate, in addition to VED. Those travelling longer distances could see their total annual road charges exceed £450, a notable change for a demographic that previously paid little to nothing in tax.
While some have criticised the timing of the policy, coming as the EV market struggles with cost and charging infrastructure, industry voices have acknowledged its broader intent. Mike Fazal, CEO of Leasing.com, stated: “A mileage-based tax is the Government’s way of asking electric vehicle drivers to contribute in a similar way to petrol and diesel drivers, who already pay through fuel duty.” He added that while it introduces a new cost, “a 3p-per-mile charge doesn’t undo the cost advantage of going electric.”
Cost Comparison Favours EVs despite New Charges
Despite the introduction of per-mile taxation, electric cars still retain a lower cost per mile compared to internal combustion engine (ICE) vehicles. According to Leasing.com, factoring in the new levy brings the total cost of driving an EV to approximately 11p per mile, compared to 17p per mile for a typical petrol car. The difference remains due to lower energy costs and reduced maintenance needs.
Government data also indicates that EV adoption is continuing, albeit at a slower rate than expected. The UK remains committed to phasing out new petrol and diesel car sales by 2035, though the rollout of supportive measures has faced criticism for inconsistency. Analysts warn that introducing new taxes at this stage could affect consumer confidence and delay progress.
Drivers currently have over two years before the pay-per-mile tax takes effect, offering some time to adjust purchasing decisions. However, the combination of VED charges and mileage fees means EV owners will now need to factor in running costs that had previously been absent from the electric driving equation.
For now, electric vehicles continue to offer economic benefits, but the gap between them and petrol alternatives is narrowing. The focus may now shift from cost savings to environmental impact, as the Government recalibrates its support for the transition to clean transport.
