19 February 2026
Drivers of electric and plug-in hybrid cars will face a new mileage-based tax, Chancellor Rachel Reeves has confirmed.
A new pay-per-mile tax will apply to electric and hybrid cars
The Electric Vehicle Excise Duty (eVED) will come into force in April 2028, charging owners based on how far they drive, with the rate set at 3p per mile for electric vehicles and 1.5p per mile for plug-in hybrids.
Under the new system, drivers of specific models will pay £210 annually for 7,000 miles, with costs rising for higher mileage. A driver covering 10,000 miles in an electric car would face a £300 charge.
Treasury minister Dan Tomlinson told Birmingham Live: “At Autumn Budget 2025, the Government announced the introduction of Electric Vehicle Excise Duty (eVED), a new mileage charge for electric and plug-in hybrid cars, which will come into effect from April 2028. Drivers will pay for their mileage alongside their existing Vehicle Excise Duty (VED).”
A government consultation document states: “It will be set at half of the equivalent rate of fuel duty for electric cars, and half again for plug-in hybrid cars. eVED will ensure all car drivers contribute, but will still maintain important incentives to switch to an electric vehicle. eVED will not require ‘trackers’ in cars, nor will the Government ask people to interact with a whole new tax system: car drivers will pay for the miles they drive alongside paying their usual road tax (VED).”
The government says the charge is designed to make the system fairer as fuel duty revenues fall and more drivers switch to electric vehicles. Critics have warned it could discourage EV adoption, though ministers maintain the tax balances revenue needs with climate objectives.
The new charge will take effect in April 2028, applying to all qualifying electric and plug-in hybrid vehicles, with higher-mileage drivers contributing proportionally more under the system.
