Autumn Budget: New 3p-Per-Mile Charge for Electric Vehicles from 2028

One of the most significant transport and environmental policy shifts announced in the Autumn Budget is the introduction of a mileage-based charge for electric vehicles (EVs). This marks a major change to how road use will be taxed in the future, and it signals the beginning of a long-term move away from fuel-based taxation.

Why Is This Charge Being Introduced?

Fuel duty currently raises around £25 billion a year, forming a substantial portion of government revenue.

However, as more drivers switch from petrol and diesel cars to electric vehicles, fuel duty revenues are set to fall sharply. The new charge aims to start replacing the long-standing fuel duty system with a usage-based model that applies regardless of how a vehicle is powered.

What Has Been Announced?

From April 2028, owners of battery electric and plug-in hybrid vehicles will pay:

 3p per mile

This is a national mileage charge and will apply annually based on the number of miles driven.

For the average driver covering around 7,000 miles per year, this works out to:

 £210 per year in additional cost

The charge applies only to electric and plug-in hybrid vehicles.

The Policy Dilemma

The challenge for the government is clear:

• On one hand, it wants to encourage EV adoption and is investing heavily in subsidies and incentives.
• On the other hand, fuel duty losses need to be replaced, and EVs currently pay far less towards the cost of maintaining and upgrading the road network.

Experts have warned that introducing a mileage charge risks increasing the cost of running an electric vehicle, potentially discouraging some drivers from making the switch.

For drivers weighing up whether to move from petrol or diesel to electric, this new annual charge may become part of the calculation.

What This Means for EV Owners and Buyers

If you already own an EV:

• You will face a new recurring annual cost from 2028.
• The exact total will depend on your mileage.
• Other running costs — such as fuel, servicing and tax — remain lower than for petrol and diesel vehicles.

If you’re considering buying an EV:

• The new mileage charge may reduce some of the cost advantages currently associated with going electric.
• However, EVs will still avoid fuel duty and conventional vehicle excise duty until future policy changes are introduced.

A New Tax Model for the Future

This measure marks the start of a long-term transformation in how road use is taxed. As the UK transitions towards low-emission transport, taxation will shift from fuel-based systems toward usage-based charging.

For now, the 3p-per-mile rate provides a clear indication of the direction of travel.

Summary

The new EV mileage charge is a practical response to falling fuel duty revenues, but it introduces a new cost for electric vehicle owners that may affect purchase decisions in the years ahead. Anyone considering switching to an EV — or planning future vehicle budgets — should take this charge into account.

If you’d like help understanding how this may affect your business fleet, personal tax planning, or cost forecasting, Merranti Accounting is here to support you.