Overview
- From April 2028, battery‑electric cars will be charged 3p per mile and plug‑in hybrids 1.5p per mile, with rates rising with inflation and the OBR estimating about £255 a year for an average BEV driver.
- The Treasury says the Electric Vehicle Excise Duty is intended to replace declining fuel duty revenue as more drivers switch to electric models.
- Industry figures and the Institute for Fiscal Studies caution that if the levy dampens EV demand, the ZEV sales mandate could force manufacturers to ration petrol and diesel models, pushing their prices higher.
- Operational details remain under development, with reporting suggesting annual odometer submissions to the DVLA and advance payments at VED renewal, followed by top‑ups or rollovers if mileage differs from estimates.
- Comparative evidence is mixed: New Zealand’s per‑km charges have coincided with EVs costing more per distance than petrol and a sales drop, while Iceland coupled kilometre charging with grants, tax relief and charging support and maintained strong EV growth; UK measures so far include extending the Electric Car Grant to 2030 and lifting the expensive car supplement threshold for BEVs to £50,000.