Electric vehicle and plug-in hybrid owners will face a new pay-per-mile tax from April 2028.
Rachel Reeves has announced a new pay-per-mile tax for electric and hybrid vehicle owners starting April 2028.
Certain motorists will face a new charge calculated on their annual mileage. Rachel Reeves has unveiled plans for a fresh pay-per-mile levy, outlining how the scheme will operate and which drivers it will affect.
The measure will target particular vehicle categories, with owners being billed at either 3p or 1.5p per mile.
For many drivers, this will translate into several hundred pounds each year.
The new levy is set to take effect in April 2028 and will apply to electric vehicle (EV) and plug-in hybrid owners.
Motorists making the switch to electric in the coming years will need to account for these extra expenses. Stay in the know by making sure you’re receiving our daily newsletter
An EV driver clocking up 10,000 miles annually will face an additional £300 bill each year, payable on top of existing vehicle tax.
Those relying on their cars for longer journeys, however, will encounter substantially higher charges.
There are fears the new levy could suppress EV sales, though the Government maintains it will create a more equitable system.
Petrol and diesel drivers already pay based on distance travelled through fuel duty charges.
Nevertheless, it marks another indication that ministers are increasingly viewing electric vehicle owners as a potential revenue stream.
Electric vehicle owners were required to pay vehicle tax for the first time last year.
Simon England, founder of ALA Insurance, 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.
“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.”
Treasury Minister Dan Tomlinson explained: “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).”
