The new tax will apply to specific types of vehicles and owners will be charged at a rate of 3p or 1.5p per mile, costing hundreds of pounds every year for many motorists
Certain motorists will be required to pay a new levy based on their annual mileage. Chancellor Rachel Reeves has revealed the introduction of a new pay-per-mile charge, explaining how it will operate and which drivers it will affect.
The measure will target specific vehicle categories, with owners facing charges of 3p or 1.5p per mile. It could amount to hundreds of pounds annually for many drivers.
The new charge will take effect in April 2028 and will apply to electric vehicle (EV) and plug-in hybrid owners, reports Birmingham Live. Motorists making the switch to electric in the coming years will need to factor in the additional expenses.
An EV driver covering 10,000 miles annually will face an extra £300 yearly bill, payable alongside vehicle tax.
However, those depending on their cars for longer journeys will encounter significantly steeper charges.
Worries have emerged that the new levy could damage EV sales, though the government insists it will establish a more equitable system.
Petrol and diesel owners already face distance-based charges through fuel and duty costs.
Yet it represents another sign of how ministers are increasingly looking to electric owners for tax income. They 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 said: “(In the) 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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