DUNTON, UK – A new tax for electric and hybrid vehicles was announced by UK Chancellor Rachel Reeves in this week’s budget, but what does that mean for EV owners?
Starting April 2028, electric car owners in the UK must pay a road charge of 3p per mile, while plug-in hybrid drivers will pay 1.5p per mile.
The Government has also announced an extra £100 million is being invested in EV charging infrastructure, building on the £400 million announced at Spending Review 2025. Also, the Vehicle Excise Duty Expensive Car Supplement threshold for new EVs will increase from £40,000 to £50,000, effective from April 1, 2026.
Ford UK Chair Lisa Brankin says the budget “sends a confusing message at a critical moment in the EV transition”.
She adds: “Extra investment in charging and the Electric Car Grant is positive, but it cannot offset the impact of a poorly timed pay per mile charge on EVs and hybrids. Against a hugely challenging market, and compliance targets drifting out of reach, this is the wrong tax at the wrong time.”
Mike Hawes, Chief Executive of the Society of Motor Manufacturers and Traders (SMMT) - one of the largest and most influential trade associations in the UK - agrees, stating: “Changes to the VED expensive car supplement are welcome, as is the additional £1.3 billion funding for the Electric Car Grant and support for charging infrastructure. These will help, but will not offset the impact of introducing a new electric-Vehicle Excise Duty – the wrong measure at the wrong time.
“Manufacturers have invested to bring more than 150 EV models to market. However, the pressure to deliver the world’s most ambitious zero emission vehicle sales targets – whilst maintaining industry viability – is intense. With even the Office of Budget Responsibility warning this new tax will undermine demand, government must work with industry to reduce the cost of compliance and protect the UK’s investment appeal.”