Pay-Per-Mile Tax UK: What EV Drivers Will Actually Pay

Pay-per-mile tax — officially Electric Vehicle Excise Duty (eVED) — is a new mileage-based charge on electric cars, starting 1 April 2028. It's 3p for every mile you drive in a fully electric car, or 1.5p a mile in a plug-in hybrid, on top of the Vehicle Excise Duty (VED) you already pay (Source: GOV.UK — Electric Vehicle Excise Duty (eVED)).

At the UK's average annual mileage of around 7,100 miles (Source: DfT National Travel Survey, 2024), that works out at roughly £213 a year — about £17.75 a month. Drive more, and it scales up proportionally; the table below breaks it down by mileage band.

Here's what most people aren't talking about: it barely impacts the savings that salary sacrifice offers EV drivers. Get your own figure from the calculator at the top of this page, then see it next to what salary sacrifice already saves you on the car itself. Even with the 3p/mile tax, the savings are still huge.

What pay-per-mile tax is and when it starts

Pay-per-mile tax for electric cars — officially Electric Vehicle Excise Duty (eVED) — is a mileage-based charge of 3p per mile for fully electric and hydrogen fuel cell cars, and 1.5p per mile for plug-in hybrids, starting 1 April 2028 (Source: GOV.UK — Electric Vehicle Excise Duty (eVED)).

eVED sits alongside your existing Vehicle Excise Duty (VED), not instead of it. It's administered by the DVLA the same way VED is: each year you'll provide an odometer reading and estimate your mileage for the coming tax period, and eVED is calculated and renewed alongside your VED.

Petrol and diesel drivers aren't affected by eVED. The government's stated reasoning is straightforward: petrol and diesel drivers already contribute to road funding through fuel duty every time they fill up, while electric vehicles currently have no equivalent — eVED is intended to close that gap.

Why it's being introduced

Fuel duty raises tens of billions of pounds a year for the Treasury, and that revenue falls as more drivers switch to electric cars that don't buy petrol or diesel. eVED is the government's mechanism for replacing that lost revenue from the vehicles that no longer generate it. It's a structural fix to how road use is funded as the overall makeup of the UK roads changes — it's not a charge aimed specifically at electric car owners.

Who it affects

eVED applies to the registered keeper of any fully electric, plug-in hybrid, or hydrogen fuel cell car. If you drive a petrol or diesel car, nothing changes for you under this policy — you'll continue paying fuel duty at the pump as you do now.

What the 3p/mile tax will actually cost you

Because eVED is charged per mile, the actual cost depends entirely on how much you drive. The table below shows the estimated annual and monthly charge at five common mileage bands, using the published 3p-per-mile rate.

*Illustrative, based on a petrol car averaging 35mpg at 52.95p/litre fuel duty (Source: GOV.UK — Amended Fuel Duty rates for 2026 to 2027; RAC Fuel Watch, September 2026). Fuel duty is only one part of a petrol driver's running costs — see "Electric vs petrol and diesel" below for the fuller comparison.

At the UK's average annual mileage of around 7,100 miles (Source: DfT National Travel Survey, 2024), eVED works out at roughly £213 a year, or about £17.75 a month — closest to the 8,000-mile row above. Even at 20,000 miles a year, well above typical UK mileage, the annual charge is £600 — less than a petrol driver already pays in fuel duty alone at half that mileage.

If you drive a lot of miles

Many drivers are feeling anxious about the cost of this tax being directly related to the amount of miles you drive. A high-mileage driver pays proportionally more than someone doing the UK average. At 20,000 miles a year, that's £50 a month. It's also exactly where the salary-sacrifice offset below matters most, because the saving on the car itself scales far beyond a £50-a-month charge.

These figures are modelled from the published eVED rate and mileage bands, not measured from real driver data — loveelectric doesn't hold fleet mileage data for this comparison, so treat them as illustrative rather than a personal calculation. This isn't tax advice; for your own circumstances, use the calculator at the top of this page or check current GOV.UK guidance directly.

Calculate how much the 3p/mile tax will cost you

The bands above are illustrative — your own number depends on your actual mileage, your current car, and your tax band. Use the calculator at the top of this page for your estimated eVED charge, and see it set against what a salary-sacrifice EV costs you, not just what it costs you on top.

Every result is based on the published eVED rate and current tax bands, not your personal circumstances — it's an estimate, not a tax calculation.

The 3p per mile rate explained

The "3p per mile" figure widely reported in the media refers specifically to eVED's rate for fully electric cars.

This is the detail that causes most of the confusion. "Pay-per-mile tax" and "3p per mile tax" get used interchangeably online, but they don't always mean the same number for every driver:

• Fully electric (BEV) and hydrogen fuel cell (HFCEV) cars: 3p per mile
• Plug-in hybrid (PHEV) cars: 1.5p per mile — half the BEV rate
• Petrol and diesel cars: no eVED at all; these drivers continue paying fuel duty at the pump instead

If you drive a plug-in hybrid and have seen "3p per mile" quoted, your actual rate is lower, at 1.5p per mile. If you drive a fully electric car, 3p per mile is the correct figure for you.

The charge applies from 1 April 2028, calculated and collected by the DVLA alongside your existing VED renewal, based on an annual mileage estimate and odometer reading rather than a metered or real-time system.

HMRC electric car mileage rates and business mileage

HMRC's "electric car mileage rate" is a separate figure from eVED entirely — it's the Advisory Electricity Rate (AER), used to reimburse employees for business mileage driven in a fully electric company car: currently 7p per mile for home charging and 15p per mile for public charging (Source: GOV.UK — Advisory fuel rates, effective 1 September 2026).

These two figures get confused because they're both described as "electric car mileage rates," but they do opposite things. eVED is a charge you pay to the DVLA based on your mileage. The AER is a rate your employer can pay you, tax-free, to reimburse the cost of charging an electric company car for business trips.

HMRC reviews the AER quarterly — on 1 March, 1 June, 1 September and 1 December — so it's worth checking the current rate after each update.

Claiming business mileage in an electric car

If you drive a fully electric company car for business trips, your employer can reimburse you at up to the current AER per mile without it counting as a taxable benefit. Pay above that rate, and the excess is treated as taxable earnings unless you can demonstrate your actual electricity cost was higher (Source: GOV.UK — Advisory fuel rates). The rate is split between home and public charging because the two cost meaningfully different amounts per mile — if you charge in both places, your employer can apportion your mileage between them on a fair and reasonable basis.

Electric vs petrol and diesel under the new system

Even after eVED is added, the day-to-day running cost gap between electric and petrol or diesel cars remains large. It of course narrows a little, but it's still cheaper to drive electric.

Add the new 3p-per-mile eVED charge to a typical 7p-per-mile home-charging cost, and an electric car still costs roughly 10p a mile to run — about half of what a typical petrol car costs at the pump, before VED and servicing are even taken into account.

Where the picture has genuinely changed is at the top of the market. The £50,000 expensive car supplement threshold catches more electric cars than it used to, EVs now pay VED at all, and public charging (at 15p a mile) closes a lot of the electric cost advantage for drivers who can't charge at home. None of this makes an EV more expensive than a petrol equivalent — it just means the gap is no longer as wide as it was when electric cars paid no VED at all.

Why salary sacrifice still comes out ahead

The long and short is that; even with eVED added, a salary-sacrifice EV still comes out ahead of the alternatives.

The saving on the car itself is the biggest cost reduction by far. The average saving for drivers who take out a lease via salary sacrifice with loveelectric is just shy of £300 a month, or £3,600 a year — because the sacrifice comes out of your gross salary before Income Tax and National Insurance, not after. On a Cupra Born, for example, a driver earning £60,000 sacrifices £523 a month from gross salary but only loses £345 from take-home pay (Source: loveelectric live pricing, 48-month/5,000-mile contract, accessed 3 September 2026).

eVED doesn't come close to eroding that. At the UK's average mileage, the new charge works out at around £18 a month; even for a high-mileage driver covering 20,000 miles a year, it's £50 a month. Set against a saving that's typically several times that size, the new charge is a small addition to the total cost of the car, not a reason to reconsider it.

What employers should tell their drivers

This section is for HR and reward teams fielding questions from employees about what pay-per-mile tax means for them getting an electric car via salary sacrifice.

If a driver on your scheme raises pay-per-mile tax, the short answer is that it's a modest change to the monthly calculation. eVED starts in April 2028, applies as a small, predictable charge based on mileage, and sits alongside — not instead of — the savings salary sacrifice already delivers on the cost of the car itself.

It isn't specific to salary sacrifice cars. Any electric car, however it's financed or owned, will be liable for eVED from 2028 — this is a change to how electric motoring is taxed generally, not a feature of the scheme.

The numbers are modest relative to the scheme's savings. Even a high-mileage driver is looking at £50 a month in eVED, against an average scheme saving of close to £300 a month.

It only begins from April 2028 and rates may well be reviewed before then. Nothing about eVED changes what a driver pays today.

If you're not yet running a salary sacrifice scheme, it will still remain the cheapest way for employees to get behind the wheel of an electric car — check your eligibility here.