Motorists across the United Kingdom who own electric vehicles are set to encounter a significant financial burden, with new government measures introducing additional annual charges that could reach £455. This development represents a substantial cost-of-living impact for environmentally conscious drivers who had previously benefited from tax exemptions.
Details of the New Taxation Structure
Chancellor Rachel Reeves has confirmed the implementation of a pay-per-mile taxation system specifically targeting electric vehicle owners. This new charge, scheduled to take effect from April 2028, will require EV drivers to pay based on their annual mileage at a rate of 3p per mile travelled.
Calculating the Financial Impact
For the average British driver covering approximately 8,500 miles per year, this new mileage charge alone would amount to £255 annually. However, many motorists who undertake longer commutes or more extensive travel will face considerably higher costs, potentially pushing their additional expenses toward the £455 mark when combined with other changes.
Compounding this new mileage-based taxation, electric vehicle owners will also lose their previous exemption from vehicle excise duty. From April this year, most electric cars will become subject to a £200 annual vehicle tax charge, representing another significant increase in running costs for EV owners.
Government Rationale and Implementation
Treasury minister Dan Tomlinson has outlined the government's position, stating that these measures were initially announced during the autumn Budget of 2025. The new system, officially termed Electric Vehicle Excise Duty (eVED), will apply to both fully electric and plug-in hybrid vehicles.
Mr Tomlinson emphasised that drivers will pay for their mileage alongside their existing vehicle excise duty obligations, with no current plans to alter the fundamental structure of vehicle taxation. The government maintains that these changes are necessary to ensure fairness across all motorists and to safeguard crucial tax revenues that support national infrastructure.
Technical Implementation and Consumer Impact
According to consultation documents, the eVED rate will be established at half of the equivalent fuel duty rate for electric cars, with plug-in hybrids facing half that rate again. Government officials have sought to reassure motorists that the system will not require tracking devices in vehicles or create complex new administrative burdens for taxpayers.
The documentation states: "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)."
This dual approach of introducing mileage-based charging while removing previous tax exemptions marks a significant shift in how electric vehicles are taxed in the UK, potentially altering the financial calculations for current and prospective EV owners across the nation.
