The new tax targets a certain kind of car parked in driveways across the country
09:53, 11 Feb 2026Updated 09:04, 12 Feb 2026
Electric vehicle (EV) owners are facing a significant increase in running costs(Image: Getty Images)
Electric vehicle (EV) owners are facing a significant increase in running costs, raising concerns among drivers in the midst of a cost-of-living crisis. Chancellor Rachel Reeves introduced the controversial pay-per-mile tax that will specifically target EV and plug-in hybrid owners in the Autumn Budget of 2025.
This is a blow for many who may have initially invested in an electric vehicle for the exemption to road tax, which ended in April 2025. However, under this new plan, drivers of electric vehicles will be charged 3 pence per mile, while those with plug-in hybrids will pay 1.5 pence per mile, as reported in BirminghamLive.
For example, a driver covering 10,000 miles a year would have to pay £300 due to this fee. The average British motorist drives approximately 8,500 miles annually, although many travel much more.
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This new tax has raised concerns that individuals with long commutes or those living in rural areas will be disproportionately affected. However, government officials highlight that petrol and diesel vehicle owners are already paying similar fees through fuel costs and taxes.
The introduction of this tax is largely in response to declining fuel duty as more motorists transition to electric vehicles. It’s important to note that this new tax will not take effect until April 2028.
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.
“Drivers will pay for their mileage alongside their existing Vehicle Excise Duty (VED).”
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).”
Mileage verification of cars will take place at annual MOT tests, with cars under three years old requiring additional mileage checks at garages, which will be funded by the government at no cost to motorists.
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