13 February 2026
UK Government begins industry consultation on pence-per-mile tax
Following the UK Government’s announcement of a pence-per-mile taxation on electric and plug-in hybrid vehicles, the government is now consulting with the automotive sector to shape the details of the policy.
The scheme, which is expected to charge around 3 pence per mile for EVs and 1.5 pence per mile for hybrids, is set to be introduced in April 2028. The current consultation will help shape the practical design and implementation.
How the system will work
The pence-per-mile model is intended to replace lost fuel duty revenue as more vehicles electrify, ensuring all drivers contribute to the upkeep of the roads. The scheme is designed to charge motorists based on how much they drive, rather than simply on vehicle ownership, aligning EV and PHEV taxation with the approach used for petrol and diesel cars.
Collaboration is key
Designing a mileage-based charging system is more complex than traditional fuel duty or road tax. Questions around data collection, privacy, vehicle types, and business versus private use all need careful consideration. Government engagement with the automotive sector, leasing companies, and fleet operators will be central to ensuring the system is practical and reflective of real-world driving patterns.
Fleets already manage detailed mileage data and have insight into operational usage, so their input will be critical to shaping a system that is both fair and workable.
What fleets should consider
For most fleets, there is no immediate operational impact. However, the consultation highlights that vehicle usage and mileage will become increasingly important in cost management and fleet strategy. Companies with robust visibility over their fleets’ mileage and utilisation will be better placed to adapt as policy evolves.
This also underscores the need for flexibility. As with previous reforms such as VED and benefit-in-kind adjustments for EVs, the transition to mileage-based charging will be phased and informed by industry feedback, rather than implemented overnight.
The long-term picture
The government emphasises that this is not a move to penalise electrification. EV adoption continues to be encouraged through favourable company car tax rates and broader incentives. Instead, the aim is to establish a sustainable, future-proof approach to road funding in an increasingly EV market.
Pence-per-mile charging is now a policy in development, and fleet operators will have the opportunity to influence its design, helping ensure it is both fair and operationally viable when it comes into effect in April 2028.
How Activa helps fleets stay in control
With mileage and driver behaviour set to play a bigger role in fleet costs and compliance, visibility matters. Activa’s AutoCentre platform, supported by Radius telematics, gives fleets real-time insight into mileage, vehicle usage and driver behaviour, helping control costs and prepare for future policy changes. Get in touch with us today to learn more.
