The new system is intended to offset declining fuel tax revenue and raise additional funds for maintaining transportation infrastructure.
How the Charge Will Be Calculated
For fully electric vehicles, the rate will be approximately €0.035 per mile (€0.022 per kilometer). Owners of plug-in hybrids will pay half as much—about €0.018 per mile (€0.011 per kilometer). The final amount will depend on the vehicle's actual mileage.
With annual mileage of about 9,320 miles (15,000 kilometers), an electric vehicle owner will pay the government approximately €330. A plug-in hybrid covering the same distance will incur a charge of about €165. These figures are based on an estimated exchange rate, so the amounts in euros may change.
During the first year of the new system, the British government expects to collect about €1.3 billion. Revenue could increase in subsequent years as the number of electrified vehicles on the road grows.
Why a New Tax Is Needed
Owners of gasoline- and diesel-powered vehicles help finance the road network through taxes included in fuel prices. Electric vehicles do not use gasoline or diesel, so as their numbers increase, government revenue from traditional fuel taxes is gradually declining.
At the same time, electric vehicles use the same roads and place a comparable burden on pavement. Some models weigh more than similarly sized internal-combustion vehicles because of their heavy traction batteries. The mileage-based charge is intended to distribute infrastructure costs among different categories of vehicles.
The Tax Comes Alongside Electric Vehicle Mandates
The new measure comes as requirements for the automotive market are becoming stricter. In 2026, electric vehicles must account for 33% of new-car sales. During the first seven months, the actual share was 25.3%, leaving automakers with a difficult task in meeting the established target.
The mandates are expected to increase in subsequent years, reaching 38% in 2027, 52% in 2028, 66% in 2029, and 80% in 2030. Beginning that same year, sales of new vehicles powered exclusively by gasoline or diesel are expected to end. Some hybrid models may remain on the market until 2035, after which all new passenger cars and vans must meet zero-emission vehicle requirements.
Potential Impact on Owners
A charge based on actual mileage will add an ongoing expense that British electric vehicle owners did not previously face. The amount should remain relatively moderate for vehicles driven fewer miles annually, while it will become more significant for high-mileage use.
Implementing the system will require a transparent method for tracking distance traveled. The government will need to determine how mileage readings are submitted, verified, and paid while also protecting personal information.
Summary
Britain's tax system is gradually adapting to the growing number of electric vehicles. The charge for every mile traveled is intended to partially replace revenue from gasoline and diesel taxes. At the same time, it will change the cost calculation for operating electric vehicles and more evenly distribute responsibility for financing the road network among different types of vehicles.
