The UK Government has detailed a new approach to electric vehicle (EV) taxation changes, confirming that a mileage-based charge will begin in April 2028.
Beginning April 2028, EVs will face an annual charge of 3p per mile, while plug-in hybrids will be charged 1.5p per mile.
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In a statement, the Office for Budget Responsibility (OBR) said the new tax is about “half the fuel duty rate paid by drivers of petrol cars”.
The new mileage-based fee will be due alongside existing Vehicle Excise Duty (VED) payments.
Several incentives have also been set out to ease the transition.
The threshold for the expensive car supplement (ECS) on battery electric cars will be raised from £40,000 to £50,000 starting in April 2026.
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By GlobalDataThe ECS is an extra VED payment spread across five years, beginning one year after a car is first registered. For a vehicle bought in 2025-2026, this additional cost totals £2,370.
Increasing the ECS threshold is estimated to result in a cost of £0.5bn for the year 2030-2031.
Between 2025-2026 and 2029-2030, the government will extend the electric car grant programme at an average annual cost of £0.3bn for those years.
Further plans include an extra £200m allocated for expanding charging infrastructure across the UK, Chancellor of the Exchequer Rachel Reeves confirmed in her Budget speech.
In addition, full business rates relief for companies operating EV charge points will be granted for ten years, Reeves added.
According to government estimates, the new mileage-based charge introduction on electric cars will offset around one-quarter of the 0.6% of GDP in revenue projected to be lost by 2050 as a result of declining fuel duty income due to increased adoption of EVs.
