The Labour government has confirmed a new mileage-based tax for electric vehicles (EVs) starting April 2028, creating a two-tier system where plug-in hybrid drivers pay half the rate of pure EV owners. Drivers covering 8,000 miles a year will face a £240 charge if driving an EV, but only £120 for a plug-in hybrid.
Tax rates and comparison
Under the plan announced by Chancellor Rachel Reeves, EV owners will pay 3 pence per mile, while plug-in hybrid drivers will pay 1.5 pence per mile. In contrast, petrol and diesel drivers currently pay roughly 6 to 7 pence per mile through fuel duty. The Treasury stated: 'DVLA will have the ability to require an official mileage check outside of the MOT cycle, including for vehicles less than three years old, where there is a reasonable suspicion of fraud or non-compliance, to help deter inaccurate reporting and support the effective operation of the tax.'
Industry and driver reactions
Steve Walker from Auto Express said: 'There's no question that the proposed new road tax regime in the UK is a two-tier system that separates vehicles with plugs from the rest of the car world.' Sheena McGuinness, a tax partner at RSM, warned: 'Using different inflation measures risks creating a widening gap over time, even if the monetary differences are relatively modest initially.' Brian MacDowell of the Alliance of British Drivers said: 'To create a tiered structure based on what powers [the vehicle] is simply unfair. Giving EV owners more favourable rates is an extortion for petrol and diesel drivers.' He called it 'another form of skulduggery from the Government when it comes to motoring taxes.'
Government justification
Decarbonisation minister Keir Mather said demand for EVs is 'stronger than ever and only going in one direction.' He added: 'We've made it easier and cheaper than ever before to go electric, and with (annual) savings of up to £1,400 on running costs there's never been a better time to make the switch, especially against the backdrop of global fuel price fluctuations.' The Treasury added: 'All vehicles contribute to congestion and wear and tear on the roads, but drivers of petrol and diesel vehicles pay fuel duty at the pump to contribute their fair share.'
