The United Kingdom’s decision to impose a mileage-based tax on electric vehicles underscores a growing fiscal challenge for governments worldwide as the shift to EVs erodes traditional fuel tax revenues, prompting other European nations to explore similar, controversial pay-per-use models.
Effective April 2028, drivers of electric cars in the UK will pay approximately $0.037 per mile traveled. Plug-in hybrid vehicle owners will face a charge of around $0.019 per mile.
This measure by the British government aims to replenish public coffers, which are losing significant income from gasoline and diesel taxes as more drivers opt for electric alternatives. The independent Office for Budget Responsibility estimates this new fee will represent about half the per-mile cost currently borne by gasoline vehicle drivers.
The new taxation framework has ignited strong opposition within the automotive sector. Ford called the policy untimely and contradictory to electrification goals, while the Society of Motor Manufacturers and Traders warned that the added expense could suppress demand for EVs. The Renewable Energy Association criticized the move as hasty, advocating for a more balanced approach.
Companies in the public charging sector, such as InstaVolt, have cautioned that rural residents and lower-income drivers could be disproportionately affected by the new charges. The core rationale behind the UK’s decision is financial sustainability for road infrastructure. London seeks to maintain a stable revenue stream, independent of vehicle efficiency or energy type, reducing reliance on increasingly irrelevant fuel taxes.
The UK’s move is being closely watched across Europe, where many countries confront the same fiscal dilemma. As electric vehicle fleets expand, fuel tax revenues shrink, posing a critical question about how to fund public roads in an electrified future.
Several European experts believe the British solution anticipates an inevitable trend within the bloc: distance-based taxes, regardless of vehicle powertrain. The Netherlands has already approved a transition to a pay-per-kilometer system for all light vehicles starting in 2030.
Germany has studied alternatives to fuel tax for years, including mileage monitoring for commercial vehicles. France is analyzing mixed taxation models, recognizing the pressure electrification will place on infrastructure funding. Spain’s Parliament has discussed revising its automotive fiscal model, not ruling out use-based taxes.
A primary difficulty in implementing such schemes across Europe centers on privacy concerns, data control, and public acceptance, given the sensitive nature of monitoring vehicle mileage. Despite these challenges, official UK projections estimate the new tax could generate over $2.3 billion annually by the early next decade.
The charges will be integrated into the existing Vehicle Excise Duty system, with annual mileage collected during mandatory vehicle inspections. However, the government acknowledges heightened risks of odometer manipulation and is evaluating additional control mechanisms.
Technically, countries like Portugal could integrate similar mileage readings into their existing inspection and data collection systems. The challenge there, and elsewhere, is balancing the need for road funding with the imperative to incentivize the transition to clean energy.