New Tax Rules for Electric Vehicles in the UK
The UK government has introduced radical changes to the tax system for electric vehicle owners. As part of the Chancellor’s budget announcements, it was confirmed that from April 2028, drivers of electric cars and hybrid vehicles will begin paying a new charge for every mile driven. This will put an end to the era of tax-free use of electric transport.
Main Tax Changes
These measures are aimed at compensating for losses from the decline in fuel duty revenues due to the decrease in sales of petrol and diesel cars. The government is trying to find new sources of budget revenue while simultaneously declaring support for the transition to clean modes of transport.
Financial Implications for Drivers
According to estimates, a driver who travels up to 8,500 miles per year will receive a tax bill of approximately £255. This is almost half of what owners of conventional internal combustion engine cars would pay for the same mileage. The UK Office for Budget Responsibility estimates that the new system will bring the state £1.1 billion in the first year of implementation, and in two years this amount could almost double.
The problem is that the implementation of this scheme is expected to affect the demand for electric vehicles.
Technical Details and International Experience
The budget announcement does not contain all the details on how the mileage of each vehicle will be precisely recorded. However, the introduction of the per-mile charge is planned for April 2028. Similar systems are already in place in some US states, particularly in Oregon, as well as in New Zealand.
Measures to Support Electrification
To mitigate public backlash, the government is simultaneously raising the price threshold for the “luxury car tax” from £40,000 to £50,000, starting in April 2026. This means that owners of models such as the Tesla Model Y or Kia EV6 will not be subject to increased tax charges as quickly as before. Furthermore, the electric vehicle grant program, which provides subsidies of up to £3,750, will be extended until 2029-2030.
These changes are taking place against the backdrop of a global transition to electric vehicles, as governments worldwide are seeking ways to compensate for losses from traditional fuel taxes. Tax systems based on mileage are considered a long-term solution for supporting road infrastructure. However, critics note that such measures could slow down the pace of electrification, especially among average consumers for whom the total cost of ownership is a key factor when purchasing a car.