Mile Stones: Why Every EV Driver Will Pay 3p Per Mile From 2028

Every electric car in Britain will soon be metered. From April 2028, drivers of fully electric cars will pay 3p in tax for every mile they cover, and plug-in hybrid drivers will pay 1.5p per mile. That is the electric Vehicle Excise Duty, or eVED, a Treasury invention confirmed by Chancellor Rachel Reeves in the November 2025 Budget. The reform is now barely two years away, and for an average EV driver covering 8,500 miles a year, it will add roughly £255 to the annual cost of running a car. For higher mileage drivers, the figure runs into many hundreds more. This is what eVED actually does, why the Treasury wants it, and what every electric and plug-in driver should be planning for now.

What eVED Is And Who Pays It

Electric Vehicle Excise Duty is a new, mileage-based tax that sits on top of the existing flat Vehicle Excise Duty regime. It does not replace VED. EV drivers will continue to pay the standard £200 annual VED that already came in when zero-emission cars lost their exemption in April this year. eVED will be charged in addition.

The two rates confirmed in the Budget red book are 3 pence per mile for fully battery electric cars and 1.5 pence per mile for plug-in hybrid cars. Conventional petrol and diesel drivers will not pay eVED at all because they already contribute fuel duty at the pump. The whole point of the new tax is to plug the projected hole in fuel duty revenue as the fleet electrifies. The Office for Budget Responsibility has forecast a drop of around £10 billion a year in fuel duty receipts by the early 2030s. eVED is the Treasury’s first attempt to recover part of that.

Implementation is set for April 2028, which gives drivers two and a bit years to plan. The administering authority will be the DVLA, not HMRC. The current expectation is that drivers will declare an estimated annual mileage, pay upfront or in instalments through the existing vehicle tax channels, and then submit an actual mileage reading at year end for reconciliation. Higher-than-estimated mileage will trigger an additional charge. Lower-than-estimated mileage will result in a credit or refund.

What It Will Actually Cost You

The headline number that the Government has put around eVED is £255 a year. That is calculated on the average annual EV mileage of 8,500 miles, multiplied by 3p per mile. For most short-commute drivers and second-car owners, this will be the broad ballpark.

For higher mileage drivers, the cost climbs steeply because the tax is purely a function of distance. A salesperson covering 25,000 miles a year in a Tesla Model 3 will face an eVED bill of £750 on top of the £200 standard VED. A delivery driver doing 30,000 miles in a Nissan Townstar EV will face £900 in eVED. Company car drivers and ride-hail drivers who switched to electric to escape fuel duty will be hit hardest in absolute terms.

Plug-in hybrid drivers face a different calculation. The 1.5p rate is half the EV figure, but the PHEV driver also pays fuel duty on any petrol they burn. The Treasury has set the PHEV rate lower precisely to avoid double taxation, recognising that a PHEV doing 8,500 miles a year on a mix of electric and petrol miles will already be contributing some fuel duty. Even so, the same 8,500 miles in a PHEV will generate £127 in eVED.

Brokers Stable Vehicle Contracts have published worked examples that put the annual hit at around £255 for an EV doing 8,500 miles, around £450 for one doing 15,000 miles, and around £750 for one doing 25,000 miles. Auto Express’s modelling puts the typical EV driver paying “hundreds of pounds a year” more from 2028.

Why The Treasury Is Doing This

The headline justification is fairness. The Government argues that fuel duty has historically funded roads via the consolidated fund, and that as more drivers move to electric power they have been effectively exempted from contributing to that pot. Fuel duty currently raises around £24 billion a year, but receipts are now falling faster than at any time since the duty was introduced in 1928. The OBR projects that fuel duty will be worth around £14 billion a year by 2032 in cash terms, which is a structural hole in the public finances.

The political case has been harder to make to drivers because eVED comes alongside other 2026 reforms that have already eroded the EV cost advantage. Zero emission vehicles lost their VED exemption in April 2026 and now pay the same £200 standard rate as a Ford Focus. The Expensive Car Supplement, which adds £425 a year on top of standard VED for cars listed above £40,000, was raised to £50,000 for zero emission vehicles in the same Budget, but plenty of mainstream EVs still fall above the threshold. The 2030 ban on new pure petrol and diesel sales remains in place but is now seen by industry as a softer target than originally planned.

Reeves did add a partial sweetener. The Budget confirmed £3.6 billion in new EV support, including continued generous Benefit in Kind treatment for company EVs at 4 percent until 2030, and an expanded ChargePoint Grant which now offers £500 per socket (up from £350). The Plug-in Truck Grant has also been extended.

What The Industry And Campaigners Say

Reaction to eVED has been mixed. Trade body the Society of Motor Manufacturers and Traders has warned that the tax sends a confusing signal at a time when private EV adoption is still lagging fleet uptake. The RAC has accepted the principle, calling pay-per-mile “the fairest long-term solution” to declining fuel duty receipts, but has pressed for the rate to be reviewed annually rather than fixed.

The AA has been more critical, pointing out that EV drivers also currently pay VAT on their electricity, which already constitutes a contribution to the public finances. Energy regulator Ofgem has not yet ruled on whether the existing 5 percent VAT on domestic electricity used to charge a car should be reduced to offset eVED. Consumer body Which? has flagged the administrative burden of self-declaring mileage and warned that the system will need to be tightly designed to prevent honest mistakes leading to penalties.

Campaign group FairCharge has warned the rate is set too high relative to the energy cost of EV driving, arguing that 3p per mile effectively doubles the marginal cost of charging at home for many drivers. The group has pressed the Treasury to look at differential rates that reward charging during off-peak hours when grid demand is lowest.

How To Prepare Now

For EV and PHEV drivers, the practical steps over the next 22 months come down to four things. First, start tracking your real annual mileage if you do not already. Most cars will record this through their app or infotainment system. Knowing whether you are an 8,500-mile or 18,000-mile driver will determine whether eVED is a £255 nuisance or a £540 problem.

Second, factor the new tax into any lease, PCP or new-purchase decision being made before 2028. Many three-year leases signed in the next twelve months will run straight through the introduction of eVED, and lessors are now starting to price the expected tax into monthly payments. Get a quote both with and without the post-2028 cost included so the comparison is honest.

Third, if you have access to off-street charging at home, lean into time-of-use electricity tariffs that price overnight power below 8p per kWh. A driver who charges at 7.5p per kWh has a marginal cost of around 2.5p per mile on a modern EV. Adding 3p of eVED takes that to 5.5p per mile, which is still well below petrol’s roughly 14p per mile at current pump prices. Drivers who rely on public rapid charging at 65p to 85p per kWh will see their margin over petrol erode much faster.

Fourth, plan for the administrative side. Submit your mileage when you renew your VED for any year that begins after April 2028. The DVLA is expected to publish a digital declaration tool through the gov.uk vehicle tax service in early 2028. Drivers who lease will need to coordinate the mileage submission with their lease provider, because the contract holder is the registered keeper and is liable for the tax.

What Happens Next

The Finance Bill clauses that give effect to eVED are expected to pass before the end of the current parliamentary session, but secondary regulations setting out the declaration mechanism, payment intervals and penalties for under-declaration will not be published until 2027. That leaves room for the rate to be revised at a future Budget. Both 3p and 1.5p are presented in the Budget red book as the starting rates, not as locked figures.

For Britain’s roughly 1.4 million pure EV drivers and 800,000 PHEV drivers, the next two years will be a window to lock in habits, energy tariffs and vehicle choices before the meter starts running. From April 2028, every mile in an electric car will carry a Treasury number attached to it. The cheapest motoring era of the electric transition is about to end.

Sources:

• Electric vehicle excise duty (eVED) (House of Commons Library)
• Pay-per-mile tax confirmed (Auto Express)
• Electric car drivers will pay for every mile from 2028 (Top Gear)
• 3p Charge Coming 2028 (Electric Car Scheme)
• UK Pay-Per-Mile Tax on EVs Explained (Stable Vehicle Contracts)