Is the UK’s New Per-Mile EV Tax Already Slowing Electric Car Sales?

Electric vehicles were once sold on a simple promise. Lower running costs, cleaner driving, and long-term savings compared to petrol and diesel cars. But a proposed change to how EV drivers are taxed is now raising uncomfortable questions about whether that promise is starting to unravel.

Although the UK’s new per-mile road tax for electric vehicles will not come into force until 2028, evidence is already emerging that the policy is affecting consumer confidence and, by extension, electric car sales. For a market that relies heavily on momentum and public trust, even the prospect of higher future costs may be enough to change buying decisions today.

What is the new per-mile EV tax?

From April 2028, the UK government plans to introduce a distance-based road tax for electric and plug-in hybrid vehicles. The policy is often referred to as a pay-per-mile tax and sits under the broader reform of Vehicle Excise Duty for low-emission vehicles.

Under current proposals:

• Fully electric vehicles will be charged around 3 pence per mile

• Plug-in hybrid vehicles will be charged around 1.5 pence per mile

The tax is designed to replace revenue traditionally raised through fuel duty. As petrol and diesel use declines, the Treasury faces a growing gap in funding for roads and transport infrastructure. A mileage-based system is intended to ensure that all drivers contribute according to how much they use the road network.

How will the tax be billed?

The government has indicated that the system will avoid live tracking or GPS monitoring. Instead, mileage will likely be declared annually when Vehicle Excise Duty is renewed, with odometer readings checked at MOTs or similar inspections.

Drivers who exceed their declared mileage would pay the difference later, while those who drive less may be eligible for adjustments. In theory, the system mirrors existing administrative processes rather than introducing constant surveillance, although privacy concerns remain part of the public debate.

What could this cost the average driver?

The financial impact depends entirely on how much someone drives.

A driver covering around 8,000 miles per year, close to the UK average, could face an additional cost of roughly £240 annually from the mileage charge alone. Higher mileage drivers could see costs rise well above £300 per year.

This is on top of standard road tax charges that EV drivers will already be paying by that point. While electric cars may still be cheaper overall than petrol or diesel vehicles when maintenance and energy costs are included, the margin is narrowing.

Is this already affecting EV sales?

While the tax has not yet been implemented, modelling by economic and automotive analysts suggests that future running costs play a major role in purchase decisions.

Forecasts linked to Office for Budget Responsibility modelling indicate that the introduction of a mileage-based tax could result in hundreds of thousands fewer electric vehicles on UK roads over the next several years than previously expected. This reflects not a collapse in demand, but a measurable slowing of adoption.

Industry reporting has also highlighted weaker growth in EV registrations during late 2025, with some manufacturers experiencing sharp drops. While multiple factors are at play, including vehicle pricing and charging infrastructure concerns, uncertainty around future taxation is increasingly cited as part of the problem.

For many buyers, the appeal of switching to electric rested on cost certainty. Introducing a new variable into that equation, even years in advance, creates hesitation.

Why perception matters as much as policy

Electric vehicle adoption relies heavily on confidence. Buyers are often making long-term decisions based on projected savings over five to ten years. When policy signals change, even if implementation is distant, that confidence can be shaken.

The per-mile tax is fiscally logical from the government’s perspective, but from the consumer’s point of view it feels like the goalposts are moving. Some drivers now question whether EVs will continue to be favoured, or whether future costs will keep rising as adoption grows.

This uncertainty does not just affect private buyers. Fleet operators, leasing companies, and charging infrastructure providers also base investments on predictable demand. Slower adoption can ripple across the entire ecosystem.

Urban and rural impacts

The tax is likely to affect drivers differently depending on where they live.

Urban drivers who rely on short journeys and public transport may feel little impact. Rural drivers, who often have no alternative to longer car journeys, could be disproportionately affected. For those households, the mileage charge risks becoming a penalty rather than a fair usage fee.

This has raised concerns about whether the policy adequately reflects regional differences in transport access.

A delicate moment for EV policy

The UK is at a critical stage in its transition away from petrol and diesel vehicles. Sales targets, emissions goals, and infrastructure investment all depend on steady growth in EV adoption.

The per-mile tax is intended to solve a long-term funding problem, but its timing and messaging matter. Introducing uncertainty too early risks slowing momentum before alternatives are fully in place.

Electric vehicles are unlikely to disappear from the UK market. But whether they become the default choice for the average driver may depend less on technology and more on how stable and predictable government policy feels in the years ahead.