Starting April 2028, electric vehicle (EV) drivers will face a new pay-per-mile tax costing an average of £200 to £300 annually. The Autumn Budget announcement by Chancellor Rachel Reeves introduces this road pricing scheme for EVs and plug-in hybrids (PHEVs), which will apply on top of existing Vehicle Excise Duty (VED).
Under the new system, EV drivers will be charged three pence per mile, while PHEV owners will pay half that rate. These costs are expected to rise annually in line with inflation as measured by the Consumer Price Index.
The Office for Budget Responsibility predicts this tax could raise approximately £1.4 billion per year by 2029-30. However, critics argue it might hinder EV adoption and reduce the number of electric cars on UK roads from around four percent to a lower figure by 2031.
James Courts, head of policy at Octopus Electric Vehicles, warned that introducing such charges prematurely could stifle growth in the EV market. He suggests a more considered approach is needed for all road users as vehicle types evolve over time.
The government plans to offset some costs by raising the threshold for expensive vehicle VED supplements from £40,000 to £50,000 starting April 2026. This change aims to benefit EV owners who purchase more costly models.
For families and daily commuters, this new tax will add a significant expense to driving an electric car or hybrid vehicle. It’s crucial for drivers to factor in these costs when considering their next vehicle purchase, especially as the number of EVs on UK roads continues to grow.
