Electric Vehicle (EV) Users at Risk of Potential Mileage Tax in the Next Budget

This article was published before the announcement of the UK’s Autumn Budget on November 26th 2025.

In the search for additional tax revenues, the government may be considering a potential levy on EVs.

Growing EV adoption and tax implications

As EVs increase in sales throughout the UK (19% of all new car registrations in June 2024 [1]), the government will lose the potential tax revenue from petrol and diesel fuel duty these vehicles would otherwise have made. To combat this, it seems the potential for a mileage tax is in discussion for the upcoming Budget.

A new pay-per-mile levy under discussion

The BBC were told by a government spokesperson that the new EV levy would be for a “fairer system for all drivers.” The new levy would consist of a pay-per-mile charge for electric vehicles, potentially being a 3p charge per mile starting from 2028 according to the Daily Telegraph [2]. It seems that if this new tax were to be implemented, it would be self reported by the driver the expected milage in a year, with credit carry over and top-up charges at the end of the year to make up any differences.

Balancing fairness and environmental goals

At face value, the new tax brings more equality for all drivers, however, along with the removal of the vehicle exercise duty exemption on electric cars earlier this year, it does seem to go against the governments push for more environmentally considerate transport in the UK. Contrary to this, the government are still maintaining the grants which offer up to £3,750 reduction on upfront purchase costs of EVs, growing the EV share of total cars in the UK.

About Pager Power

Pager Power undertakes technical assessments for developers of renewable energy projects and tall buildings worldwide. 

For more information about what we do, please get in touch.

References

[1] House of Commons Library, “Electric vehicles and infrastructure”, 20 June 2025.
(Online) Available: https://commonslibrary.parliament.uk/research-briefings/cbp-7480/ [Accessed 19 November 2025].

[2] BBC News, “EV drivers could face new tax in Budget”, 6 November 2025.
(Online) Available: https://www.bbc.co.uk/news/articles/c0mxgzpj1dvo [Accessed 19 November 2025].

Image accreditation: Electric Vehicle on Country Road, unsplash.com, 24 June 2024. (Online) Available: https://unsplash.com/photos/a-red-car-driving-down-a-country-road-sYtwtMmTvg8 [Accessed 19 November 2025]