Key Facts
• London to apply congestion tax to EVs starting January 2026.
• EVs to face a mileage-based tax of 3 pence per mile by 2028.
• EV registration in London reached 140,166 units (5.3% of total) by March 2025.
• EV adoption quadrupled since 2019 due to prior tax exemptions.
• London congestion tax for EVs set at £13.5/day, higher for gas vehicles (£15–£18).
• UK to ban new gasoline and diesel car sales by 2030, hybrids by 2035.
• Increased EVs failed to alleviate traffic congestion in London.
• Fuel tax revenue shortfall prompted new EV taxation policies.
• EV sales could drop by 440,000 units within three years of mileage tax.
• UK automotive industry warns of barriers to EV adoption.
Summary
The UK is revising its electric vehicle (EV) policies, introducing new taxes to address financial challenges and traffic congestion. Starting January 2026, EVs will be subject to London’s congestion tax (£13.5/day), and by 2028, a mileage-based tax of 3 pence per mile will be implemented. These measures aim to offset declining fuel tax revenues as EV adoption grows. Despite a fourfold increase in EV registrations since 2019, traffic congestion persists, and the government projects up to 1.4 million EVs in London by 2030. However, industry experts warn these changes could hinder EV adoption, with potential sales dropping by 440,000 units within three years of the mileage tax. The UK government remains committed to banning new gasoline and diesel car sales by 2030 and hybrids by 2035, but concerns over affordability and demand for EVs are mounting.
