The UK government will introduce a per-mile road charge for electric vehicles (EVs) starting April 2028, charging 3p per mile for EVs and 1.5p for PHEVs, while extending EV grants and adjusting VED thresholds.
The UK government has unveiled a significant shift in its approach to electric vehicle (EV) taxation, signaling a major change for the nation's automotive landscape. Hidden within the recent Budget announcement is a plan to introduce a per-mile road charge for both EVs and hybrid vehicles , ending the current tax-free status enjoyed by electric car owners.
This move marks the initial step towards integrating electric motoring into the same revenue-generating framework as combustion engine vehicles, despite the government's continued pronouncements of support for the transition to cleaner transportation. The announcement is a clear indication of the government's intention to offset the decline in fuel duty revenue as the adoption of EVs increases, forcing the Treasury to seek alternative income streams. The policy has stirred controversy, with some questioning its impact on EV adoption rates and the overall affordability of electric vehicles.\The mechanics of the new tax system are straightforward. From April 2028, drivers of fully electric cars will be charged 3 pence per mile, while plug-in hybrid electric vehicle (PHEV) drivers will pay 1.5 pence per mile. This means a driver traveling 8,500 miles annually could face a bill of approximately £255, a figure that is still significantly lower than the fuel duty paid by drivers of combustion engine vehicles covering the same distance. The Office for Budget Responsibility (OBR) estimates that the scheme will generate £1.1 billion in revenue during its first year, with the potential for this figure to nearly double within two years, contingent on EV sales performance. While the precise details of how the mileage will be tracked are still being finalized, the implementation date of April 2028 is firm. The UK is following the lead of some other nations like the United States and New Zealand, that have already adopted mileage-based charging schemes.\To mitigate the potential negative impact of the new tax on EV adoption, the government has coupled the road charge with several supporting measures. Firstly, the threshold for the “expensive car supplement” on vehicle excise duty (VED) will be raised from £40,000 to £50,000, starting from April 2026. This adjustment aims to soften the financial blow for owners of higher-end EVs, ensuring they are not subject to additional road tax surcharges as quickly as under the previous system. Furthermore, the existing EV grant scheme, which currently provides subsidies of up to £3,750, will be extended to the 2029-30 financial year, representing a government investment of approximately £300 million annually. This multi-faceted approach aims to balance the need for revenue generation with the imperative of incentivizing the purchase and use of electric vehicles. The move has been met with mixed reactions from industry experts and the public, with many closely monitoring how the implementation and long-term implications of these changes will unfold
Electric Vehicles EV Tax Road Charge Hybrid Vehicles UK Government Fuel Duty Vehicle Excise Duty EV Grants Taxation Transportation
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