Chancellor Rachel Reeves has officially confirmed a radical overhaul of Britain's motoring taxes, introducing a new pay-per-mile system that will directly link charges to distance travelled.
Who Pays and How Much?
The new tax specifically targets owners of fully electric vehicles (EVs) and plug-in hybrid cars, who until now have contributed little to national funds through traditional fuel duty.
Under the new system, EV owners will pay 3p for every mile they drive. This means a driver covering 10,000 miles annually would face an extra £300 in charges each year.
Plug-in hybrid drivers will pay a lower rate of 1.5p per mile, recognising that these vehicles still use some petrol or diesel and therefore contribute through existing fuel duty.
Timing and Financial Impact
The new rules won't take effect immediately. Drivers have until April 2028 to prepare for the significant change in how road usage is taxed.
For the average British motorist driving approximately 8,500 miles per year, the annual cost for an EV owner would be around £255. Longer journeys will become noticeably more expensive under this mileage-based levy.
Why This Tax Is Being Introduced
The primary motivation is the declining revenue from fuel duty as more drivers switch to electric and hybrid vehicles. The government needs to recoup lost tax income from road usage to maintain transport infrastructure.
Motoring experts state the government aims to raise £1.4 billion through this new tax, with funds likely directed toward public services and infrastructure projects.
However, experts warn this new charge could impact the appeal of switching to electric vehicles, as financial savings have been a major factor for many buyers.
What Drivers Can Do Now
With several years until implementation, experts advise EV owners to review their electricity tariffs, as some providers offer special rates for at-home charging that could help offset the additional tax costs.
Drivers should also consider planning routes more efficiently to minimise total mileage subject to the new levy when it comes into force.
