Rachel Reeves Confirms £300 Annual Charge for Electric Vehicle Drivers
Chancellor Rachel Reeves has officially announced a new pay-per-mile tax for electric and hybrid vehicle owners, which will come into force from April 2028. This move introduces significant additional costs for drivers who have switched to greener transport options.
Details of the New Pay-Per-Mile Tax
The tax will apply specifically to electric vehicles (EVs) and plug-in hybrids, with charges set at 3p per mile for electric cars and 1.5p per mile for hybrids. For an average driver covering 10,000 miles each year, this translates to an extra £300 annually on top of existing vehicle excise duty (VED).
Treasury minister Dan Tomlinson provided further clarification, stating, "At Autumn Budget 2025, the Government announced the introduction of electric vehicle excise duty (eVED), a new mileage charge for electric and plug-in hybrid cars, which will come into effect from April 2028. Drivers will pay for their mileage alongside their existing vehicle excise duty (VED)."
Industry Reaction and Concerns
Simon England, founder of ALA Insurance, expressed concerns about the financial implications of this policy. He 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."
Impact on Future Transport Choices
This announcement means that drivers planning to transition to electric vehicles in the coming years must now factor in these additional expenses. The policy aims to address revenue gaps as traditional fuel tax income declines with the shift away from petrol and diesel vehicles.
However, critics argue that imposing such charges could undermine efforts to promote sustainable transport and meet environmental targets. The balance between generating government revenue and encouraging eco-friendly vehicle adoption remains a key point of discussion.
As the 2028 implementation date approaches, further details on administration and enforcement of the pay-per-mile system are expected to be released by the Treasury.
