The new pay-per-mile Electric Vehicle Excise Duty will see EV and hybrid drivers charged based on how far they travel from 2028, with some paying more than £300 per year
Rachel Reeves is poised to deliver another blow to British drivers, with fresh vehicle tax charges set to clobber road users who depend most heavily on their cars. New regulations announced by the Chancellor will soon see certain motorists billed according to their mileage, with a pay-per-mile system launching in 2028.
The incoming Electric Vehicle Excise Duty (eVED) levy will require drivers to fork out 3p per mile for fully electric vehicles, whilst hybrid owners face charges of 1.5p per mile. This pricing structure means electric car owners making the epic 837-mile trek from John O’Groats to Land’s End will face a £25.11 tax bill, whilst those covering the 100-mile stretch between Oxford and Cambridge will pay £3.
The 3p-per-mile rate means motorists clocking up Britain’s average annual distance of 10,000 miles will need to shell out £300 to maintain their mobility.
These fresh levies have been brought in to compensate for declining petrol and diesel fuel duty revenues as increasing numbers of drivers abandon traditional combustion engines for electric alternatives.
HMRC figures reveal fuel duty income for April 2025 to August 2025 totalled £10bn, representing a £0.1bn drop compared to the equivalent period in the preceding quarter. The Office for Budget Responsibility (OBR) predicts that fuel duty revenues will account for merely 2% of overall tax income in 2025/26.
This represented a massive decline, with fuel duty charges making up nearly 7% of the UK’s overall tax revenue back in 2019/20. The fresh levy sparked fierce criticism, with specialists from the Society of Motor Manufacturers and Traders (SMMT) challenging the proposal, reports the Express.
Industry leaders branded the initiative as the “wrong policy” at an inappropriate moment, whilst EV specialists also voiced worries that it might ultimately dampen electric vehicle purchases.
Nevertheless, the Government intends to forge ahead with the policy, dismissing any modifications when the Conservatives questioned whether VED charges were set to be “reviewed”.
Dan Tomlinson, Exchequer Secretary to the Treasury, stated: “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).”
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