Chancellor Rachel Reeves has confirmed a new pay-per-mile tax that will charge electric vehicle (EV) owners 3p per mile and plug-in hybrid owners 1.5p per mile. This means a driver covering 10,000 miles a year in an EV would pay an additional £300 annually under the new system.
Details of the New Charge
The tax is set to come into force from April 2028. While the UK average annual mileage is around 8,500 miles, millions of motorists travel further, particularly those who use their cars for work or long commutes, and will face higher bills. The charge applies specifically to EVs and plug-in hybrids, with petrol and diesel drivers already paying based on distance through fuel duty.
Impact on EV Adoption
Concerns have been raised that the new charge could deter people from switching to electric vehicles. Simon England, founder of ALA Insurance, said: “Drivers are being encouraged to switch to electric cars ahead of the 2030 ban on ICE vehicles but financial incentives are quickly disappearing. If EV drivers are expected to pay the same, or more, than petrol and diesel drivers, then that’s a legitimate barrier that will deter thousands of road users from switching.”
England added: “The rise in EV adoption will leave quite a gap in the Government’s revenue from road tax, but raising taxes for electric cars is definitely off-putting to people considering a switch, especially when they won’t have a choice from 2030, as it stands.”
