Chancellor Rachel Reeves has unveiled a significant new financial charge for owners of electric vehicles (EVs) and plug-in hybrids (PHEVs) in the UK. The move forms part of a radical overhaul designed to address a growing shortfall in traditional road tax revenue.
The core of the new policy is a pay-per-mile levy, set to be introduced in April 2028. This follows a previous substantial increase in Vehicle Excise Duty (VED) for electric cars earlier in the year, marking a shift away from the historically lower running costs associated with EVs.
How the New EV Mileage Charge Will Work
The system will apply different rates depending on the type of vehicle. Under the confirmed plans, owners of pure electric vehicles will be charged three pence for every mile they drive. For drivers of plug-in hybrid vehicles, a lower rate of 1.5 pence per mile will apply.
It is anticipated that motorists will need to declare their annual mileage to calculate the fee owed. Based on the current UK average annual mileage of 8,500 miles, a driver of a pure EV would face an estimated yearly charge of £255.
The Motive Behind the New Road Tax
The primary driver for this new charge is the steep decline in revenue from fuel duty, as more Britons switch away from petrol and diesel cars. The government states the levy is necessary to ensure all road users contribute fairly to the upkeep of roads and essential services.
Motoring expert Jonathan Such has indicated that the Treasury aims to generate approximately £1.4 billion in total revenue from the new pay-per-mile scheme.
Potential Impact on Electric Vehicle Adoption
Industry experts have warned that the introduction of this charge could act as a deterrent to future electric vehicle adoption in the UK. A key selling point for EVs has long been their lower running costs compared to internal combustion engine vehicles, and this new financial burden threatens to undermine that economic advantage.
To help offset the upcoming cost, EV owners are being advised to proactively review their home energy tariffs for charging and check their eligibility for any government grants related to home charging points.
With the implementation date set for 2028, drivers have several years to prepare for this fundamental change in how they are taxed for using the roads.
