The government is promoting electric car savings of £1,400 annually
A tax deadline looms for UK drivers. Brits could pocket savings of £1,400 annually by making the switch to an electric vehicle, with the Government’s Electric Car Grant offering an additional £3,750 discount. However, motoring experts caution that a ‘pay per mile’ tax trap is looming in just two years’ time.
The Government has launched a campaign encouraging drivers to embrace electric vehicles, emphasising the UK’s extensive 87,000-strong charging network and the financial benefits of ditching petrol and diesel. According to the campaign, over 50,000 drivers have already benefited from the Electric Car Grant.
Yet, the November Budget confirmed a new tax for electric and some hybrid vehicles. From April 2028, EV drivers will be subject to a 3p per mile road charge, while plug-in hybrids will incur a 1.5p per mile fee. These rates are set to increase annually in line with inflation. This announcement comes as the prices of the UK’s most sought-after used EVs and hybrids continue to decrease.
The latest AA Cars Used Car Index reveals that the average price of the top 20 most-searched EVs and hybrids fell by 1.5% to £16,826 in the final quarter of 2025, down from £17,085.
Aviation, Maritime and Decarbonisation Minister Keir Mather said: “Over 50,000 drivers have made savings of up to £3,750 off a new EV and £1,400 a year on running costs. Our campaign is here to show millions of Brits the benefits of making the switch, which could save their family budget thousands.
“With over 87,000 public chargers across the UK and thousands more on the way, our message is clear – going electric has never been easier and under this government, you can save thousands when you do.”
Colin Low, Managing Director at Ipswich-based Kingsfleet, said: “Business owners can find serious savings in leasing EVs through their companies. “The Benefit in Kind tax rate is currently only 3% of the list price (increasing for the next 7 years) so they are much cheaper than petrol/diesel cars.
“Having obtained my first EV in 2020, I’m now on my third. I have absolutely no intention of returning to petrol or diesel vehicles as a range of 250 miles is ample for 99% of my journeys.”
Colette Mason, Author & AI Consultant at London-based Clever Clogs AI, told Newspage that the forthcoming taxes mean the Government is sending mixed signals. She said: “Incentivising EVs still has a role if the aim is to cut air pollution and transport emissions, which remain among the UK’s hardest problems to address. “However, the messaging feels mixed when savings and incentives are promoted now while a per-mile road charge for EVs and hybrids is confirmed from 2028.
“That risks people questioning whether switching early is genuinely encouraged or simply a short-term push before ‘creative’ new taxes are applied.”
Rohit Parmar-Mistry, Founder at Burton-on-Trent-based Pattrn Data, said it is worse than mixed messages: “This isn’t just mixed messaging, it’s a classic bait-and-switch. The government dangles a saving today, only to hide the stick of a pay-per-mile tax for 2028.”
He said: “We are heading for a future where we are taxed by the mile by the state. Stop treating drivers like data points to be monetised and start treating them like people who just need to get to work.”
