The government has confirmed that electric car owners will start paying a new mileage-based tax from April 2028, after concluding a lengthy consultation on the scheme known as Electric Vehicle Excise Duty, or eVED.
Under the confirmed rates, fully electric car drivers will pay 3p for every mile driven, while plug-in hybrid drivers will pay a lower rate of 1.5p per mile, reflecting the fact that PHEV drivers already pay fuel duty on the petrol or diesel they use. The new charge comes on top of standard Vehicle Excise Duty, which EV owners have already been paying since April 2025.
The government says the new tax is designed to replace declining fuel duty revenue as more drivers switch to electric vehicles, and that it mirrors the way petrol and diesel drivers already pay more the further they drive. Officials estimate a typical EV driver covering 8,000 miles a year will pay around £240 annually in eVED, compared with roughly £480 a year that a petrol or diesel driver covering the same distance would pay in fuel duty alone. Higher-mileage drivers will feel it more, with someone covering 20,000 miles a year facing a bill of around £600, on top of the existing £200 flat-rate VED that EV drivers already pay.
Following industry pushback, the government has softened some of the practical details. Vehicles under three years old will be exempt from annual mileage checks, and fleet operators will be allowed to use estimated mileage readings and bulk payment arrangements, rather than tracking every vehicle individually. The rate itself will rise each year from 2029 in line with inflation.
Industry reaction has been mixed. Some groups welcomed the concessions on fleet administration, but others, including the British Vehicle Rental and Leasing Association, argue the tax risks slowing EV adoption at exactly the point the market needs it to accelerate.
For drivers currently weighing up a switch to electric, it’s a change worth factoring into the long-term cost of ownership, even if it’s still a couple of years away.
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