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The UK's transition to electric vehicles (EVs) has long been heralded as a cornerstone of the nation's net-zero ambitions, promising cleaner air and a greener future. Yet, this environmental imperative has collided with a fiscal reality, the steady decline in revenue from fuel duty, a major historical source of Treasury income. In the recent Autumn Budget, Chancellor Rachel Reeves announced a landmark, yet highly anticipated, policy shift to address this funding gap, the introduction of a national pay-per-mile road user charging scheme for EVs from April 2028. This move marks a significant departure from existing motoring taxation, sparking a robust debate across the transport and automotive sectors, including varied responses from key technical and industry bodies such as Intelligent Transport Systems (ITS) UK.
Fuel duty, currently frozen at 52.95p per litre until September 2026, generates around £24 billion in revenue annually. As more drivers switch to EVs and plug-in hybrids (PHEVs), which were previously exempt from fuel duty, this income stream is projected to dwindle rapidly. The government's independent forecaster, the Office for Budget Responsibility (OBR), has highlighted this decline as a significant fiscal risk.
The Chancellor stated the Electric Vehicle Excise Duty (eVED) is necessary because "all cars contribute to the wear and tear on our roads," and taxation should be based on usage, not just the type of car. Under the proposal, EV owners will pay 3p per mile and PHEV drivers 1.5p per mile from April 2028, with rates increasing with inflation from 2029. This is in addition to the Vehicle Excise Duty (VED) that EVs are already subject to since April 2025. The system is expected to use self-reported mileage via the DVLA, with MOT tests potentially used for verification to avoid real-time tracking. The OBR estimates eVED could generate £1.1 billion in 2028-29, potentially rising to £1.9 billion by 2030-31. This revenue is intended to help double road maintenance funding in England.
The announcement has created a divide between those who support the principle of usage-based charging and those concerned about the impact on EV adoption. Concerns are mounting however, that the Chancellor's reliance on self-reported and annually verified odometer readings for the new pay-per-mile tax could incentivise a significant increase in vehicle mileage fraud. While the policy is designed to create a fairer system, critics warn that the manual, self-reporting approach is vulnerable to abuse by unscrupulous sellers and drivers seeking to minimise their tax burden. A recent analysis by diagnostics platform Carly found that Brits are already overpaying by an estimated £750 million a year on used motors with clocked mileage.
According to car expert Matas Buzelis from carVertical, "Proving odometer fraud remains a significant challenge, which unfortunately leaves many scammers feeling untouchable". This reality, coupled with the new financial incentive, could make it even more difficult for buyers to trust a vehicle's mileage history and lead to unforeseen maintenance issues. The potential for a rise in undetectable fraud could undermine the policy's aims and create a secondary market rife with misrepresentation.
Technical bodies like ITS UK generally view the move toward distance-based charging as a necessary step. Max Sugarman, Chief Executive of ITS UK, welcomed the shift to a "fairer, more effective road tax system" based on usage. He believes UK transport technology suppliers are capable of providing advanced solutions beyond simple odometer readings. Other experts, such as Richard Sallnow from PA Consulting, called it an "inevitable step" due to falling fuel duty revenue. Campaign for Better Transport (CBT) has long supported road pricing, noting public support for a fair system.
Car manufacturers and motoring organisations, however, are worried the new tax, on top of existing VED, will discourage consumers from switching to EVs. Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), called eVED the "wrong measure at the wrong time". The OBR predicts the charge will reduce demand, estimating 440,000 fewer EV sales by March 2031. Motoring groups like the AA and RAC raised questions about fairness and transparency, with the RAC warning it could slow the EV transition. Some critics also raised concerns about potential "double taxation" for drivers using EVs on tolled roads abroad.
To mitigate concerns and encourage EV adoption, the Chancellor included several measures:
These incentives aim to offset the impact of eVED, though some industry figures like Autotrader's Ian Plummer believe the grants may not fully compensate for lost sales.
The introduction of pay-per-mile charging is a significant step towards a sustainable road taxation model in an electric future. As highlighted by ITS UK and others, a usage-based system is generally considered fairer and more effective for road network management.
The success of the policy hinges on its implementation and addressing industry concerns about timing and fairness to maintain consumer confidence in EVs. A transparent and well-designed system utilising smart technology while protecting privacy will be crucial for public acceptance and meeting net-zero goals. The move to distance-based taxation is clear, but its execution requires careful planning and collaboration with technical experts.