Budget 2025: UK to Introduce Pay-Per-Mile Tax for Electric & Hybrid Vehicles from 2028
03/12/2025

Electric vehicle (EV) drivers in the UK are facing a major change to motoring costs. Starting in April 2028, a new mileage-based tax — officially called electric Vehicle Excise Duty (eVED) — will be added on top of standard road tax.

How much will it cost?

• Pure electric cars: 3 pence per mile
• Plug-in hybrids (PHEVs): 1.5 pence per mile

The government estimates the average EV driver (who does around 8,000 miles a year) will pay an extra £240 per year.

Petrol, diesel, vans, motorcycles, buses, coaches and HGVs are exempt from this new charge — at least for now.

How will it work?

• Mileage will be checked at your annual MOT
• The system will be run by the DVLA and integrated into the normal road-tax renewal process
• Each year you’ll declare your current mileage and estimate how many miles you’ll drive in the coming 12 months
• Your eVED bill will be calculated from that estimate and paid alongside regular VED (road tax)

For brand-new EVs, dealers will be able to pre-pay and bundle an estimated mileage charge into the on-the-road price, or you can choose to pay it yourself annually.

Other changes coming soon

From 1 April 2026, the threshold for the “expensive car supplement” (the £410 annual extra tax) on new electric cars rises from £40,000 to £50,000. This will reduce the number of EVs that attract the luxury-car surcharge.

Why is the government doing this?

Electric vehicles currently pay zero or very low road tax because they don’t use fuel. As more drivers switch to EVs, the Treasury is losing billions in fuel-duty revenue. The new mileage charge is designed to replace some of that lost income in a “fairer” way.

Will it hurt EV sales?

Many experts believe yes.

Mamta Valechha, analyst at Quilter Cheviot, warned:

“This added charge will dampen demand for electric vehicles at a time where sales need to increase to meet government targets. The impact is likely to be small for now, but it could easily stall progress.”

With new EVs already significantly more expensive to buy than petrol or diesel equivalents, an extra £200–£300 a year in running costs removes one of the biggest financial incentives for going electric.

Have your say

The government has launched a public consultation on the detailed rules. You can read the documents and complete the online survey until 18 March 2026.