Chancellor Rachel Reeves has introduced a new pay-per-mile car tax that will cost the average electric vehicle (EV) driver £300 annually, in what critics are calling an unwelcome leaving present as she is expected to leave her post. The charge, set to take effect from April 2028, will see EV owners pay 3p per mile and hybrid owners 1.5p per mile, according to the Treasury.
New Tax Details and Impact
The electric Vehicle Excise Duty (eVED) is designed to offset the loss of fuel duty revenue as more motorists switch to electric cars. For an EV driver covering 10,000 miles per year, the charge amounts to £300 annually. However, total costs will vary depending on individual mileage. The Treasury confirmed that the eVED rates will be uprated in the 2029/2030 tax year in line with Consumer Prices Inflation (CPI) to maintain their real-terms value.
Motorists will pay the tax based on their estimated mileage, with actual readings checked at annual MOT tests. Officials have warned that drivers who underestimate their mileage will face additional charges to cover the difference. The eVED charge must be paid on top of existing taxes, including the standard £200 Vehicle Excise Duty (VED) fee and any expensive car supplement.
Government Justification and Reaction
The Treasury stated: “At Autumn Budget 2025, the government announced the introduction of electric Vehicle Excise Duty (eVED), a new mileage charge on electric vehicles (EV) and plug-in hybrid vehicles (PHEV), which will take effect from April 2028. Given all cars cause congestion and wear and tear on the roads, eVED has been designed to ensure EV and PHEV drivers make a fair contribution to the public finances as fuel duty revenues decline, while continuing to pay less than the equivalent fuel duty paid by petrol and diesel vehicles.”
The announcement has sparked criticism from motoring groups and cash-strapped road users, who see the new levy as a significant financial burden. Reeves has overseen a series of car tax increases since becoming Chancellor two years ago, with previous Vehicle Excise Duty rises already hitting drivers' wallets.
