From April 2028, electric vehicles (EVs) in the UK will be subject to a new mileage-based Electric Vehicle Excise Duty (eVED). Here’s what you need to know about how it works, what it means for your wallet, and how it compares to running a petrol or diesel car.
How Will eVED Work?
- Start Date: April 2028
- Rates:
- Battery Electric Vehicles (BEVs): 3p per mile
- Plug-in Hybrid Electric Vehicles (PHEVs): 1.5p per mile
- How It’s Calculated: Drivers will pay based on the number of miles driven from April 2028. Mileage will be checked annually—typically at your MOT, or for new cars, around their first and second registration anniversaries. Payment will be integrated into the existing Vehicle Excise Duty system, managed by the DVLA.
- Adjustments: If you drive more than your estimated mileage, you’ll pay the difference; if you drive less, you’ll receive a credit.
- Scope: Applies to UK-registered EVs and PHEVs, including miles driven abroad. Vans, buses, motorcycles, and hydrogen cars are exempt.
Pros and Cons for EV Buyers
Pros
- Lower than Petrol/Diesel Fuel Duty:
Even at 3p per mile, EVs remain significantly cheaper to run compared to petrol or diesel cars, where fuel duty averages around 6p per mile. According to the OBR, an average electric car driver in 2028–29 (driving 8,500 miles) will pay about £255 in eVED—roughly half the fuel duty paid by petrol and diesel drivers. - Predictable and Transparent Costs:
A mileage-based tax means you pay in proportion to how much you drive, which feels fairer than flat annual charges. - Still Cheaper Overall:
EVs will continue to benefit from lower maintenance costs and electricity prices compared to fossil fuel vehicles. - Encourages Efficient Driving:
Drivers who cover fewer miles will pay less, incentivising reduced mileage and potentially greener habits.
Cons
- End of “Tax-Free” EV Advantage:
EVs previously enjoyed zero road tax; this change removes a major financial incentive for switching. - Extra Admin for Drivers:
You’ll need to estimate mileage upfront and reconcile later, which adds complexity compared to the current system. - Impact on High-Mileage Drivers:
Those who drive long distances (e.g., commuters, fleet users) will see noticeable annual costs—£255 for 8,500 miles, and more for higher mileage. - Potential Future Increases:
Rates will rise annually with inflation and could increase further if government revenue targets grow.
Annual Running Cost Comparison: EVs vs Petrol/Diesel Cars
Here’s how annual running costs stack up after April 2028, based on typical assumptions:
- EV tax: £0.03 per mile
- Electricity cost: £0.07 per mile
- Petrol/Diesel cost: £0.15 per mile (including fuel duty)
| Mileage | EV Cost (£) | Petrol/Diesel Cost (£) |
|---|---|---|
| 5,000 | 500 | 750 |
| 10,000 | 1,000 | 1,500 |
| 15,000 | 1,500 | 2,250 |
Example Breakdown for 5,000 Miles:
- EV Excise Duty: 3p × 5,000 = £150
- Electricity: 7p × 5,000 = £350
- Total EV cost: £500 (tax + electricity)
So, even with the new EV tax, EVs remain about 33% cheaper per mile than petrol or diesel cars for typical mileage.
The information provided in this guide is intended as a general overview to help readers understand the key measures introduced in the UK Budget 2025. It does not claim to be exhaustive and should not be relied upon as a substitute for tailored professional advice. If you have any questions or require specific guidance, please
speak to one of our experts.
