Chancellor of the Exchequer Rachel Reeves has unveiled a significant new financial burden for electric vehicle owners, confirming the introduction of fresh taxes that will see drivers of specific models paying hundreds of pounds more in annual running costs.
New Pay-Per-Mile System for Electric and Hybrid Cars
The government's controversial new taxation framework will implement a pay-per-mile charge specifically targeting owners of electric vehicles (EVs) and plug-in hybrid models. This system is scheduled to come into force from April 2028, marking a substantial shift in how environmentally friendly vehicles are taxed on UK roads.
Detailed Breakdown of the New Charges
Under the proposed scheme, pure electric vehicle owners will face a rate of 3 pence per mile driven, while plug-in hybrid drivers will be charged at 1.5 pence per mile. Considering the average British motorist covers approximately 8,500 miles annually, this translates to an additional £255 per year for EV drivers at the 3p rate.
Millions of drivers who regularly travel significantly further distances will encounter even higher financial impacts from these changes.
Additional Vehicle Excise Duty for Electric Cars
In a further development, electric vehicle owners will now be required to pay standard vehicle excise duty (VED), a charge from which they have previously been exempt. The Treasury has indicated that this duty is expected to rise to £200 for most cars starting from April of this year.
When combined with the new mileage charge, this creates a potential total annual tax burden of £455 for the average electric vehicle driver, fundamentally altering the financial calculations for those considering or already committed to electric motoring.
Government Justification for the New Taxes
Treasury officials have defended the measures as necessary to ensure fairness across all road users and to safeguard crucial tax revenues that support national infrastructure. The government maintains that these changes are essential as the transition to electric vehicles accelerates, potentially eroding traditional fuel duty income.
Treasury minister Dan Tomlinson elaborated on the government's position, stating: "At autumn Budget 2025, the Government announced the introduction of Electric Vehicle Excise Duty (eVED), a new mileage charge for electric and plug-in hybrid cars, which will come into effect from April 2028. Drivers will pay for their mileage alongside their existing Vehicle Excise Duty (VED)."
Implementation Details and Consultation Findings
According to official consultation documents, the new pay-per-mile charge will be established at half the equivalent rate of conventional fuel duty for electric cars, with plug-in hybrids facing half that rate again. The government has emphasised that the system will not require tracking devices in vehicles nor will it necessitate drivers interacting with an entirely new tax administration framework.
The consultation document clarifies: "eVED will ensure all car drivers contribute, but will still maintain important incentives to switch to an electric vehicle. eVED will not require 'trackers' in cars, nor will the Government ask people to interact with a whole new tax system: car drivers will pay for the miles they drive alongside paying their usual road tax (VED)."
This announcement represents a significant policy shift that will directly impact the financial considerations of current and prospective electric vehicle owners across the United Kingdom, potentially influencing the pace of the nation's transition to greener transportation options.
