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Tax Shock Could Short-Circuit EV Confidence, Tax Adviser Warns

ended 10. November 2025

The government is reportedly preparing to introduce a per-mile charge for electric vehicles (EVs), a move that could add hundreds of pounds a year to running costs and mark the end of EVs’ long-standing tax advantage.

The proposed rate of around 3p per mile is designed to replace falling fuel duty revenues as petrol and diesel cars phase out, with implementation expected from 2028.

How It Might Work

Officials are exploring several models for monitoring and collection:

  • Mileage tracking via onboard telematics, GPS data, or MOT submissions
  • Automatic billing through HMRC or vehicle tax accounts
  • App-based reporting for private and fleet drivers

The levy would come on top of Vehicle Excise Duty (road tax), which EVs began paying from April 2025 (£10 in year one, then £195 annually).

The Cost of Going Green

The new charge follows a series of policy shifts that have steadily chipped away at the financial case for going electric:

  • Benefit-in-Kind (BiK) rates for company EVs — currently 3% — will rise to 9% by 2029/30, up from 0% just five years ago
  • Road tax parity with petrol and diesel cars introduced in 2025
  • Mileage-based charging now on the horizon

Industry groups warn the change could slow EV adoption just as sales begin to plateau, while Treasury sources insist it’s a necessary step to secure future transport revenues.

What Do You Think?

  • Should EVs pay per mile to help fund roads and infrastructure?
  • Will this deter drivers from going electric?
  • Could a tiered or off-peak rate make the system fairer?
  • Is this reform about fiscal fairness, environmental policy, or political expediency?

3 responses from the Newspage community

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Luke James
Tax Director at Gravitate Accounting
Introducing a mileage-based tax at this stage risks damaging both confidence and progress. New electric vehicles represent significant investments for businesses and consumers, and changing the rules too soon undermines trust in the system.

Early adopters have not had long enough to benefit from the incentives that encouraged them to switch, and the UK’s charging infrastructure is still far from ready for mass adoption.

If these measures go ahead without proper preparation, we could see a sharp slowdown in EV sales, weaker business investment, and a setback to the government’s own environmental targets. It makes little sense economically or environmentally to penalise clean technology before the transition has fully taken hold.
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Scott Gallacher
Director at Rowley Turton
This is purely a tax grab but was arguably always on the cards. As more and more of us switched to EVs, the government was naturally going to lament the loss of fuel duty and look for ways to recover this money.

However, the idea of a government app tracking our every move (or drive) is a positively Orwellian, and no doubt the police and the intelligence services will be demanding access to that data.

All of this will, of course, dampen demand for EVs as without the running cost savings, they start to look very expensive.

The big losers from all of this might be the lease companies, who could face significant losses due to any collapse in EV used prices.
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Colette Mason
AI Ethics Consultant at Clever Clogs AI
This isn't just about electric vehicles. It's about what happens when governments sell transformation with one hand and yank the rug with the other. The EV crowd made rational decisions based on BiK rates at 0-3% and no road tax, now they're facing 9% BiK by 2029, road tax parity, and per-mile charging. Here's what this teaches us about any technology adoption, whether it's electric cars or enterprise AI: if your decision-making depends on the government's fiscal incentives that can evaporate overnight, you're not planning, you're gambling. This is what Whitehall trust erosion for the public looks like in policy form.