In a significant move for electric vehicle (EV) drivers, Octopus Energy has announced it will cover a new government road tax charge for thousands of its existing customers.
Shielding Early Adopters from New Charge
Octopus Electric Vehicles (EV) has pledged to absorb the cost of a new pay-per-mile road tax for its 20,000 existing lease customers. The tax was introduced by the Labour Party government in the Autumn Budget of 2025.
The company says the decision is a reward for customers who switched to electric motoring early. It aims to keep EV driving simple and affordable by ensuring these drivers' costs remain steady.
Details of the New Electric Vehicle Tax
The new levy, known as eVED, is scheduled to come into effect in April 2028. It is designed to replace the revenue lost from fuel duty as more motorists transition away from petrol and diesel.
Under the rules:
- Fully electric cars (BEVs) will pay 3p per mile.
- Plug-in hybrid vehicles (PHEVs) will pay 1.5p per mile.
For an average driver covering 8,500 miles annually, this equates to roughly £255 per year in additional road tax. This charge is on top of the standard £195 Vehicle Excise Duty (VED) that electric cars have paid since 2025.
Simplifying the Process for Drivers
Gurjeet Grewal, CEO of Octopus Electric Vehicles, emphasised the company's commitment to reducing administrative hassle for its customers. "Our customers shouldn’t have to wade through new forms or fiddle with extra mileage reports," Grewal stated.
"If there’s admin to be done, we’ll make it as easy as possible," he added. The firm has also committed to contributing to government consultations on the new tax rules to help ensure they are fair and easy for drivers to navigate.
Grewal also welcomed broader government signals on EV support, noting: "Extending the Electric Car Grant and investing further in public charging will give drivers the confidence to make the switch. As momentum stalls elsewhere in Europe, the UK now has a real opportunity to lead the way on cheaper, cleaner driving."
The move by Octopus provides immediate financial certainty for its lease customers and underscores the evolving landscape of motoring taxation as the UK progresses towards its net-zero goals.
