Starting April 2028, UK drivers of electric vehicles (EVs) and plug-in hybrids (PHEVs) will be subject to a new distance-based tax (known as Electric Vehicle Excise Duty, or eVED) of 3p and 1.5p per mile, respectively.
Why a mileage charge for EVs and PHEVs?
The new mileage charge (eVED) is part of an effort to create a fairer road funding system. It's expected to raise £1.1 billion by 2028–2029 and is designed to introduce an equivalent to the fuel duty that drivers of petrol and diesel vehicles pay.
It’s half the cost per mile compared to the diesel and petrol fuel duty, pointing to continued government support for electric transport. PHEV drivers will pay half less again, due to the fact that they also pay existing fuel duty when they use their car's internal combustion engine and therefore contribute to these revenues. The lower per-mile charge reflects that they're paying a combination of taxes.
How much will it cost the average EV driver?
For electric car drivers travelling 8,500 miles a year, the charge is likely to cost around £255. The rate will be subject to an increase with inflation each year.
How will the eVED be implemented?
The charge will be integrated into the existing Vehicle Excise Duty system and verified during annual MOT inspections. A consultation is underway setting out further detail on how it will work and seeking views on its design and implementation.
Are plug-in hybrids still worth considering?
For drivers of plug-in hybrids it may feel like they're being hit with a double tax, however the government argues it's balancing the different fuel sources and tax contributions.
Hybrid drivers with vehicles that have shorter electric-only ranges may feel the pinch because on journeys that extend beyond their battery range, they’ll be charged both the 1.5p-per-mile tax and the tax on the petrol or diesel used.
However PHEVs continue to remain an efficient option for drivers who mostly complete short journeys on electric power.
Leasing electric and hybrid vehicles rather than buying, allows drivers to access predictable costs without the long-term risk.