In a significant overhaul of the motoring tax system, outgoing Chancellor Rachel Reeves has confirmed a new pay-per-mile tax targeting specific electric vehicles (EVs) and plug-in hybrids. This levy, set to be introduced in April 2028, will require drivers to pay additional charges based on the distance they travel each year, on top of the existing vehicle tax.
The proposed charges are 3p per mile for EV owners and 1.5p per mile for those driving plug-in hybrids. Considering the UK’s average annual mileage of around 8,000 miles, this could translate into an extra £240 per year for many motorists. Those who regularly drive longer distances—such as commuters, rural residents, or individuals using their cars for work—may face even higher costs.
This policy comes as the government seeks to address declining fuel duty revenues amid the rising adoption of electric vehicles, which currently pay little to no fuel tax. However, the new mileage-based tax raises concerns about potentially discouraging the switch to cleaner electric cars, a key goal in reducing carbon emissions.
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While petrol and diesel drivers have traditionally contributed through fuel duty proportional to their usage, the new scheme introduces a similar usage-based cost for EV and plug-in hybrid drivers for the first time.
As Rachel Reeves prepares to leave her post, succeeding leadership will inherit this controversial but pivotal policy designed to adapt motoring taxation to the evolving vehicle landscape.