Some drivers will see running costs surge by hundreds of pounds a year
Rachel Reeves has announced the new pay-per-mile tax.(Image: Getty Images)
Ministers have set out further details of a new pay-per-mile car tax system set to be introduced in the UK.
The controversial new charge will apply to owners of electric vehicles (EVs) and plug-in hybrids.
Rachel Reeves and the Treasury are increasingly targeting EV owners as a way to raise more money.
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EV owners will be charged at a rate of 3p per mile, while for plug-in hybrids it will be 1.5p per mile.
Motorists will be charged based on how far they travel.
The 3p rate means someone doing 10,000 miles a year would have to pay £300.
The new tax will come into force in April 2028 and is in response to falling fuel duty revenue as more Brits switch to electric.
And it comes after EV drivers were forced to pay vehicle tax for the first time last year.
Treasury minister Dan Tomlinson outlined the Government’s plans saying: “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.
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“Drivers will pay for their mileage alongside their existing Vehicle Excise Duty (VED).”
In response to a question to Chancellor Rachel Reeves by independent MP James McMurdock, Mr Tomlinson also confirmed there were no current plans to change the structure of vehicle tax, Mirror reports.
A consultation document on the new pay-per-mile charge states: “It will be set at half of the equivalent rate of fuel duty for electric cars, and half again for plug-in hybrid cars. eVED will ensure all car drivers contribute, but will still maintain important incentives to switch to an electric vehicle.
“eVED will not require ‘trackers’ in cars, nor will the Government ask people to interact with a whole new tax system: car drivers will pay for the miles they drive alongside paying their usual road tax (VED).”