New car tax changes announced in the Autumn Budget under Labour Party leadership are set to raise the running costs for many electric vehicle (EV) drivers by as much as £438 annually, compared to owners of petrol and diesel cars.
Electrifying.com’s analysis reveals that a Volkswagen ID.3 owner who charges their EV at home during off-peak hours currently faces total yearly costs of around £898, combining the existing Vehicle Excise Duty (VED) and the newly introduced mileage-based levy.
However, EV drivers who rely solely on public charging stations — where rates typically hover around 60p per kWh — will see their annual costs soar to approximately £1,490. This puts them at a significant disadvantage, paying about £438 more than an equivalent petrol car owner covering similar mileage.
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Ginny Buckley, Chief Executive of Electrifying.com, expressed concern over the impact on drivers dependent on public chargers, estimated to be one in four licence holders. “These drivers now face paying more per mile than fuel-efficient petrol vehicle users,” Buckley stated.
She urged the government to reinstate financial support for home EV charger installations, which can cost over £1,000 upfront. “Without help, many drivers will face an immediate financial burden,” Buckley added. She also pointed out the uneven VAT treatment between home and public charging, calling for the “unfair gap” to be addressed.
Under the new scheme, Battery Electric Vehicle (BEV) drivers must estimate their annual mileage and pay an Electric Vehicle Excise Duty of 3p per mile on top of the existing VED, which is currently £10 in the first year and £195 thereafter. The Treasury estimates that the average EV driver travelling 8,900 miles annually will owe roughly £279 a year starting in 2028.
The government has set the mileage charge at 3p per mile for pure BEVs, with plug-in hybrids subject to 1.5p per mile. Full hybrid vehicles remain unaffected by this levy but must still pay VED and fuel duty on petrol usage.
Details on how commercial electric vehicles such as vans and haulage trucks will be taxed remain unclear, adding further uncertainty for business users.