Chancellor Rachel Reeves has announced a new £240 pay-per-mile tax for drivers, set to take effect from April 2028. The charge will apply to drivers of electric and plug-in hybrid vehicles, as reported by the RAC.
The new tax falls under a pay-per-mile Electric Vehicle Excise Duty (eVED) that will be introduced in two years. Under the proposals, drivers of electric cars will be required to pay 3p per mile, while those with plug-in hybrids will pay 1.5p per mile.
For an average electric car driver covering 8,000 miles per year, this translates to an additional £240 annually on top of the current Vehicle Excise Duty (VED). The RAC noted that the operational details of the eVED system remain unclear at this stage.
However, the UK government has stressed that it will protect motorists' privacy, meaning drivers will not be required to install trackers or report their locations. Instead, mileage will be checked around the first and second registration anniversary of the vehicle.
Explaining the introduction of eVED in April 2028, a government spokesperson said: "It will be set at half of the equivalent rate of fuel duty for electric cars, and half again for plug-in hybrid cars. 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)."
The announcement has sparked debate among motoring groups and drivers, with concerns over the financial impact on electric vehicle owners. The government, however, maintains that the tax is designed to balance revenue needs while encouraging the transition to cleaner vehicles.
