Drivers of plug-in hybrid vehicles (PHEVs) are set to be hit by a significant new financial burden, facing what industry bodies are labelling a 'double tax whammy'. The charge, announced in the Labour Party's Autumn Budget, will see these motorists paying a new levy on top of existing fuel duty.
The Details of the New Electric Vehicle Tax
From 2028, owners of plug-in hybrid cars will be subject to an electric vehicle excise duty (eVED) of 1.5p for every mile they drive. Crucially, this charge will apply regardless of whether the vehicle is running on its electric battery or its conventional petrol or diesel engine. This creates a scenario of double taxation, as drivers will pay both the new per-mile levy and standard fuel duty on the petrol or diesel they use.
Most PHEVs on UK roads today have a pure electric range of 50 miles or less, with some older models managing only around 25 miles. This means for the majority of journeys beyond these short distances, the combustion engine is engaged, yet the new tax will still apply to every mile covered.
Industry Backlash and Consumer Anxiety
The announcement has provoked strong criticism from leading automotive and motoring organisations. Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), condemned the policy as "punitive". He argued that plug-in hybrids serve as a vital stepping stone for drivers not yet ready for a full electric vehicle, offering reassurance on longer trips where charging may be a concern.
"Taxing them twice for fuel and eVED is punitive and will dissuade consumers from investing in this beneficial technology," Hawes stated. He warned that the move risks damaging uptake of a technology that is currently helping to reduce emissions.
Edmund King, president of the AA, questioned the timing of the announcement, suggesting it could prematurely harm sales. "They are not talking about introducing it until 2028 so why are we talking about it now?" he said. King expressed concern that drivers may now opt to buy another petrol car before the 2030 ban on new petrol and diesel sales, simply to avoid the impending double tax.
Risks to Decarbonisation Goals
Other experts echoed these fears, warning that the policy could undermine the UK's environmental objectives. Ben Nelmes, chief executive of the research group New Automotive, said "Introducing a pay-per-mile scheme as early as 2028 is premature and risks undermining the government’s wider decarbonisation ambitions."
Steve Walker from Auto Express acknowledged that EV drivers would eventually need to contribute to replace lost fuel duty revenues. However, he raised "serious questions over whether now was the best time to float pay-per mile taxation as the answer." He concluded that the budget announcement has sown further doubt in consumers' minds about switching to an electric vehicle.
The consensus from the industry is clear: while a new system for taxing electric miles is inevitable, the proposed double charge on plug-in hybrids could stall progress and confuse consumers at a critical time for the transition to cleaner transport.
