Announced in Rachel Reeves’ Budget for 2025, a new electric vehicle pay-per-mile tax is due in April 2028, which will also include some plug-in hybrid vehicles. However, the government has launched a consultation to get the public’s input on this issue, so we are yet to find out the full details.
If this affects you directly, you can find out more about how these taxes could work in practice, and what this change means for your finances below.
What is Electric Vehicle Pay-Per-Mile Tax?
This new tax is designed to be a mileage-based charge for using the road, which means anyone who drives an electric vehicle (EV) will pay 3p per mile, and anyone who drives a plug-in hybrid vehicle will pay 1.5p per mile. These rates will go up every year in line with inflation, but could change depending on the results of the government’s consultation.
How Will Electric Vehicle Pay-Per-Mile Tax Work?
In practice, the tax would work by EV drivers estimating their mileage for the year ahead, paying an upfront charge or spreading the payment across the year, and then submitting their actual mileage at the end of the year to see whether they’re due a refund or need to pay more. Their mileage will be checked yearly, usually during their MOT as normal. For new cars, these checks will happen around their first and second registration anniversary.
The payment will be taken automatically via the DVLA’s existing Vehicle Excise Duty (VED) system and mileage will be based on in-vehicle odometers. The tax applies to any UK-registered EV, no matter where in the world it is driven.
The government has said “there will be no requirement to report where and when miles are driven or install trackers in cars”.
Why Has This Tax Been Proposed?
The new EV tax has been proposed to make up for the loss in fuel duty (a tax paid by petrol and diesel vehicle drivers to use the road/pay for road maintenance) that has come from an increase in EV sales.
The Office for Budget Responsibility (OBR) estimates the new EV tax is roughly half of the current fuel duty tax paid by petrol and diesel drivers.
Do Electric Vehicle Drivers Have a Say?
Yes. The government has launched a consultation (similar to a survey) which asks for the public’s input. Until the consultation ends on Wednesday, the 18th of March 2026, we won’t know the exact details of this new tax.
Respond to the consultation with your thoughts.
What Can Electric Vehicle Drivers Do to Save Money?
- Electric vehicle energy tariffs: There are two-rate tariffs available from certain energy providers that offer cheaper electricity during off-peak times, e.g. for charging your car overnight or using the dishwasher. But this also means peak-time electricity rates can be more expensive (as they go above Ofgem’s Energy Price Cap), so be careful how much you use during the day. There are also ‘add-on’ tariffs available, where you can charge your car on the cheaper rate, but all other electricity use in your home will be charged at your existing tariff rates. You’ll need to have a compatible EV and a smart charger for this type of tariff. Find out more on MoneySavingExpert.
- Charge at home if you can: If you can, it’s best to get a charger installed at home for cheaper (rates go as low as 7p p/kWh, compared to around 85p p/kWh at a public charge point) and more convenient charging.
- If not, find free charging points near you: If installing an at-home charger isn’t an option for you, there are 1000s of free public charging points available. Find your local, free EV charging point. Just bear in mind, it can take hours to charge your vehicle depending on the capacity of its battery and the speed of the charge point. That’s why it’s often more convenient to charge from home if you can.
- Check your council’s website for free/cheap parking incentives: Some councils offer free parking permits for EVs if the tailpipe emissions meet their standards. Check your local council’s website for more information.
- Avoid charging to 100% or letting the battery drop to 0% to extend your vehicle’s battery life: To make your vehicle last longer, you should avoid charging it to 100%, or letting it drop to 0%. This will drain the battery quicker and reduce the vehicle’s range. Most EVs only need charging to 80% and perform best when they never drop below 20%, but you should always check with your car manufacturer. Frequent charging at rapid charge points can also affect the battery.
Money Worries Getting You Down?
If you’d like to plan a debt-free future, or reduce your outgoings before April 2028, contact Angel Advance today to get free*, confidential debt advice over the phone, via email, through WhatsApp, or in a webchat.
Alternatively, try our free online debt advice tool, which you can complete at any time, day or night. Just fill out your details and our tool will make a monthly budget for you, give you debt advice tailored to your situation, and show you which debt solutions you’re eligible for – all within 10-15 minutes.
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