Drivers of Plug-In Hybrids and Electric Vehicles in the UK Will Face Mileage Taxes | Carscoops

      New Budget introduces per-mile road charges for EV and PHEV owners as government seeks to recover lost fuel revenue

       6 hours ago

      

      

      

      

       by Chris Chilton

      

      

      

      

      

      

      EVs set to incur a charge of 3p per mile in the UK commencing April 2028.

      PHEV owners will face a fee of 1.5p per mile to compensate for lost fuel tax revenues.

      Grants will be extended to 2030, with the luxury vehicle threshold increased to £50,000.

      The UK government has unveiled a significant new policy impacting the nation’s electric car market. Tucked away in the Chancellor's Budget announcement is the revelation that both electric vehicles (EVs) and hybrids will be subject to a per-mile road charge, indicating that electric motoring will no longer be exempt from taxation.

      After years of searching for an alternative to fuel duty amid declining petrol and diesel sales, the Treasury has finally made its decision clear.

      Related: Your Green Plug-in Hybrid Is An Eco Sham, Study Finds

      The UK is officially gearing up to tax EVs based on the distance they travel, placing them in the same revenue-generating category as combustion engine vehicles, while still claiming to support the shift to more sustainable transport.

      How Will It Work?

      Owners of fully electric cars will be charged 3 p (around $0.40) per mile, whereas plug-in hybrid drivers will incur a 1.5 p (approximately $0.20) fee.

      For those driving up to 8,500 miles (13,700 km), the total cost will be around £255 ($336), as reported by the BBC, which is still about half of what a combustion vehicle driver would pay in fuel duty for the same distance.

      The Office for Budget Responsibility (OBR) expects this plan to generate £1.1 billion ($1.45 billion) in its initial year, with potential for that figure to nearly double two years later, depending on the sales of EVs. However, the uptake of EVs is anticipated to be negatively affected by this new scheme.

      When and How?

      The Budget announcement did not disclose all the specifics. Key details regarding how the mileage will be accurately tracked will come later. However, mileage-based charging is confirmed to be implemented starting in April 2028.

      Certain U.S. states, like Oregon, as well as New Zealand, have already established mileage-based charging programs.

      To mitigate the impact and maintain interest in EVs, the UK government is simultaneously increasing the price threshold for the "expensive car supplement" on its Vehicle Excise Duty (VED) from £40,000 to £50,000 ($53-66k), effective from April 2026. This means that owners of a Tesla Model Y or Kia EV6 won’t face higher road-tax surcharges as quickly as they would have previously.

      In essence, this presents a small incentive before the implementation of the pay-per-mile charge. Additionally, ministers will continue the EV grant scheme, which provides subsidies up to £3,750 ($4,950), until 2029-30, costing approximately £300 million ($395 million) each year.