A New Era in the UK: Electric Vehicles to Be Taxed Per Mile
The UK government has announced a major policy shift regarding electric vehicles, combining increased incentives with a brand-new tax system. While an additional £1.3 billion will be allocated to extend EV incentives through 2030, a per-mile tax for electric and plug-in hybrid vehicles will also come into force starting in 2028.
Rumors had circulated last week hinting that the government was preparing to boost EV incentives, and the newly released budget confirms this. Previously, £650 million was set aside for the 2025–2028/29 period; with the new addition, the total incentive fund now approaches £2 billion. Furthermore, £200 million in extra support will be directed toward expanding national charging infrastructure.
Expanded Incentives
Currently, the UK offers up to £3,750 in incentives for electric vehicles priced up to £37,000. With the new funding, the scope and duration of these benefits are expected to grow. Corporate EV fleets and charging infrastructure investments will also be supported, making the installation of charging stations more appealing through additional tax advantages.
Incentives Meet Taxation: eVED
Alongside the boosted support, a new tax will enter into force. Starting in 2028, the Electric Vehicle Excise Duty (eVED) will increase annual ownership costs for EV drivers by an average of £276. Plug-in hybrid owners will also be taxed, though the impact will be milder due to existing fuel taxes they already pay.
This mileage-based tax mirrors the fuel tax applied to petrol and diesel cars. Under the new system, EVs will be taxed at 3 pence per mile, while plug-in hybrids will pay 1.5 pence per mile. Government forecasts suggest eVED will generate £1.1 billion in revenue for the 2028/29 fiscal year, rising to around £1.9 billion by 2030/31.
In the government’s own words:
“All vehicles contribute to the wear and tear of our roads. A modest per-mile tax will maintain the appeal of electric vehicle ownership while helping fund the infrastructure they rely on.”
