New Pay Per Mile EV Car Tax: How Will Drivers Really Be Impacted?

What is the new pay per mile tax?

The proposed pay per mile car tax has been brought in as a “matter of fairness” according to the UK government.

Currently, petrol drivers pay an average of £600 a year in fuel duty for driving around 6,100 miles, while there isn’t a charging tax on EV cars. The new EV tax changes would plug the country’s financial gap as more drivers make the switch to electric cars.

EV drivers would pay 3p per mile, and plug-in hybrid owners would be looking at 1.5p per mile, meaning EV drivers would simply pay more based on their mileage. For example, an EV driver would pay an extra £300 for every 10,000 miles they drove.

Although it’s been announced now, this won’t come into effect for drivers until April 2028.

How will the 3p per mile work?

Details of the pay per mile tax are still being worked out, so it’s not 100 percent clear on how the government plans to enforce this new EV tax. It’s believed that EV drivers will be asked to self-report, estimating their mileage at the start of the year, and will then pay based on this.

Your true mileage will then be recorded during your MOT test. For those who overestimated their mileage, it’s believed you would get credits towards your next year of driving, while those who have gone over will have to pay the difference.

New cars (in the first three years) do not have MOTs, instead, these drivers may need to record their yearly mileage at a local garage.

However, these are currently all assumptions on how the tax will work. The Government hasn’t announced its plans for reporting yet, so this system could be different when the tax comes into play.    

How does EV road tax compare to petrol drivers?

Understandably, many drivers aren’t keen on another new road tax for EV cars.

We know that for many, EV cars offer savings compared to their fuel counterparts, especially if using overnight home tariffs. However, when analysing the overall numbers, we found that EV drivers are still better off in comparison to their petrol counterparts, especially when taking into account the other tax changes taking place.

To see a real like-for-like difference for drivers, we analysed the 2025-26 VED rates, fuel duty, and the 3p per mile tax, to see whether you’re better off switching to an EV or petrol vehicle once the 3p per mile tax comes into effect.

Pay per mile car tax vs fuel duty

As mentioned, an EV driver totalling up 10,000 miles on their car would be looking at a £300 bill on the proposed 3p per mile scheme.

However, although fuel duty remains frozen until September 2026, based on a like-for-like mileage, petrol drivers would be spending around £968 on fuel tax for 10,000 miles, spending much more than their EV counterparts.

First year road tax

In 2025, it was announced that EVs will no longer be exempt from road tax – all brand-new EVs will now pay £10 in their first taxable year, and any used EVs that are already registered will now have to pay the £195 standard road tax that other petrol and diesel vehicles are subject to.

However, these changes to the VED rates will hit petrol drivers as well, as it is based on the CO2 emissions of your vehicle. Those with the highest CO2-producing vehicles will be hit the hardest in terms of cash, facing up to £5,490 in the first year of road tax.

As the average CO2 emissions for new cars in 2024 was 102.5 g/km, this would place the average new petrol car in Band F. This means the previous average first year road tax came to £195 for drivers, and will be increasing to £390 based on these changes.