UK budget 2025: New per-mile tax imposed on EVs

To the dismay of those considering or making the switch to electric mobility, the recently announced UK budget has introduced a new pay-per-mile tax on electric and hybrid vehicles, set to take effect in April 2028.

How much is per-mile tax on EVs in the UK?

Starting April 2028, EV owners in the UK will pay a charge of 3p per mile, while plug-in hybrid drivers will bear a fee of 1.5p per mile. These pay-per-mile tax rates will reportedly increase annually in line with inflation.

This new tax on EVs is said to be half the fuel duty rate that petrol car drivers currently pay in the UK, according to the Office for Budget Responsibility (OBR), BBC reported.

The UK government also confirmed that the existing 5p fuel duty cut will remain in place until September 2026, after which it will rise annually based on the Retail Price Index (RPI).

How will per-mile tax on EVs be calculated?

For those wondering how the UK government will calculate the per-mile tax imposed on EVs and hybrid vehicles, the system will track drivers' mileage, typically during their annual MOT or at specific registration anniversaries for new vehicles.

The payment of this tax will be integrated into the current Vehicle Excise Duty system managed by the DVLA.

It was reported that an EV driving 8,500 miles in the 2028-29 financial year is expected to pay around £255, significantly less than petrol and diesel drivers.

However, the government acknowledges concerns about potential tampering with odometers, known as "clocking." They are exploring ways to mitigate this risk.

The UK's new per-mile tax is estimated by the OBR to generate £1.1 billion in revenue for the 2028-29 financial year, rising to £1.9 billion by 2030-31.