New Pay-Per-Mile Tax for Electric Vehicles Confirmed by Chancellor
Chancellor Rachel Reeves has officially announced the introduction of a new mileage-based tax for electric vehicles (EVs) and plug-in hybrids, set to take effect from April 2028. This new charge, known as electric vehicle excise duty (eVED), will require drivers to pay based on the distance they travel each year, at a rate of 3p per mile for EVs and 1.5p per mile for hybrids.
Financial Impact on Drivers
Under this scheme, an EV driver covering 6,000 miles annually will incur an additional £180 charge per year, which must be paid alongside their standard vehicle excise duty (VED). For those with longer commutes or living in rural areas with limited public transport, the costs could be significantly higher, potentially adding hundreds of pounds to their yearly expenses.
The government argues that this move aims to create a fairer motoring tax system, noting that petrol and diesel vehicle owners already contribute through fuel duties based on mileage. However, concerns have been raised that the new tax might discourage the adoption of electric vehicles, especially as EV owners only recently started paying VED for the first time last year.
Government Justification and Details
Treasury minister Dan Tomlinson explained that the eVED was announced at the Autumn Budget 2025 and is designed to ensure all car drivers contribute to road maintenance and environmental initiatives. The government has emphasized that the tax will still maintain important incentives for switching to electric vehicles, despite the additional financial burden.
This development marks a significant shift in how electric and hybrid vehicles are taxed, moving away from traditional models to a usage-based approach. As more drivers consider transitioning to electric cars in the coming years, they will need to factor in this new charge when calculating overall costs.
