The UK government has confirmed a policy shift that ends the tax-exempt era for electric vehicles. Starting April 2028, drivers of electric and plug-in hybrid cars will face distance-based charges, a move designed to offset declining fuel duty revenues as the nation transitions away from petrol and diesel.
Electric vehicle owners will pay 3p per mile, while plug-in hybrid drivers face a 1.5p-per-mile charge. For context, a driver covering 8,500 miles annually would owe approximately £255 during the 2028-29 financial year. Rate adjusts annually with inflation.
According to the Office for Budget Responsibility, the UK’s independent forecaster, this represents roughly half the fuel duty paid by petrol car drivers over equivalent distances. OBR projects the system will generate £1.1 billion in its inaugural year, climbing to £1.9 billion by 2030-31.
As sales of combustion-engine vehicles continue their downward trajectory, fuel duty revenues have steadily contracted. Treasury has spent years evaluating replacement mechanisms, and this per-mile framework represents the government’s chosen solution.
The policy acknowledges a fundamental tension: officials remain publicly committed to clean-transport transformation, yet they’re introducing charges that the OBR warns could potentially dampen consumer interest in purchasing electric vehicles.
To maintain electric vehicle appeal, the government is raising the Expensive Car Supplement threshold from £40,000 to £50,000, effective April 2026. Additionally, the maximum £3,750 EV grant has been extended through the 2029-30 fiscal period at an estimated annual cost of £300 million.
Technical details on distance tracking haven’t been disclosed yet. However, the per-mile charging structure is confirmed, leaving industry observers and drivers alike to await implementation specifics.
The UK’s approach signals a broader challenge facing governments worldwide: how to fund transportation infrastructure while encouraging cleaner vehicle adoption.
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