The British government has confirmed plans to introduce a new pay-per-mile tax for electric vehicles from April 2028. The measure, known as the Electric Vehicle Excise Duty (eVED), will apply to both fully electric cars and plug-in hybrids.
Drivers of fully electric vehicles will pay 3 pence per mile, equivalent to around 2.2 euro cents per kilometre, while plug-in hybrid owners will pay 1.5 pence per mile, or roughly 1.2 euro cents per kilometre. The rate will be adjusted annually in line with inflation. For a driver covering less than 15,000 kilometres a year, the new charge could add close to €300 to the annual cost of owning an electric car.
And that comes on top of the UK's existing annual Vehicle Excise Duty (VED), worth around €235 a year, which motorists already pay regardless of the type of engine powering their vehicle.
The British government expects the new mileage-based tax to generate £1.1 billion, or around €1.3 billion, in its first year, with revenues expected to rise considerably in the years that follow.
Drivers will be able to pay the tax either in a single payment or through monthly instalments. They also have to provide an estimate of their annual mileage, with the actual figure recorded and submitted to the authorities at the end of the year.
Those who drive more than expected will have to pay the difference, while those who cover fewer miles will receive a credit against their next payment.
The British government argues that asking electric-car owners to contribute is only fair. It points out that all vehicles contribute to congestion and road wear, while petrol and diesel drivers already pay fuel duty at the pump. Electric-vehicle drivers currently pay no equivalent charge.
Behind the decision lies a growing problem for public finances. As battery-powered vehicles become more widespread, revenues from fuel duty are falling, leaving governments looking for new ways to fund roads and replace lost tax income.
But the measure has sparked concern among drivers and the automotive industry. Vicky Edmonds, a representative of an organisation advocating for electric-vehicle drivers, described the system as "too complex", warning that relying on estimated mileage could create financial uncertainty for households.
The British Vehicle Rental and Leasing Association (BVRLA), meanwhile, has warned that the scheme could penalise early adopters by taxing electric vehicles that are already on the road, while also creating an additional administrative burden for companies managing large fleets.
But the UK is not alone: New Zealand, Iceland, and around 40 US states are among the governments reviewing how road use should be taxed as revenues from petrol and diesel decline.
In New Zealand, for example, light electric vehicles have been subject to road-user charges since 1 April 2024. Drivers pay NZ$76, around €42, for every 1,000 kilometres travelled in a fully electric vehicle, while plug-in hybrids are charged NZ$38 per 1,000 kilometres.
France could eventually face the same debate. The French government currently collects between €30 billion and €35 billion a year through energy excise duties. According to projections from the French Treasury published in December 2023, the rapid electrification of the country's vehicles could result in an annual revenue shortfall of €13 billion by 2035 and more than €30 billion by 2050.
For electric-car drivers, the era of exceptionally low motoring taxes may be starting to come to an end.
