November 28, 2025
Sara Davies
Starting April 2028, drivers of electric vehicles (EVs) and plug-in hybrids (PHEVs) in the UK will face a new distance-based charge of 3p and 1.5p per mile, respectively, as part of a government initiative to create a fairer system for all motorists.
But since the new charge is twice as much for electric vehicles than plug-in hybrids, what’s fuelling the murmurs of hybrid drivers being hit hardest? And for that matter, how’s it fair for EV drivers to pay more? Read on to find out…
What’s the new mileage charge and why’s it being introduced?
The new mileage charge is expected to raise £1.1 billion by 2028–2029 and will be integrated into the existing Vehicle Excise Duty system and verified during annual MOT inspections. The rate will increase with inflation each year and is designed to introduce an equivalent to the fuel duty that drivers of petrol and diesel vehicles have to pay. Despite it increasing the costs of driving an electric car, the charge will still only sit at half the cost per mile that diesel and petrol drivers have to pay in fuel tax indicating that the government are keen to continue to incentivise electric transport. PHEV drivers will pay half less again.
For electric car drivers travelling 8,500 miles a year, the charge is likely to cost around £255 and will be added to the existing Vehicle Excise Duty payment.
Why are PHEV drivers being charged less than EV drivers?
Since electric vehicles are lower emission than plug-in hybrid cars, you’d be forgiven for wondering why they’re being hit with double the new road charge. And how plug-in hybrids could still be deemed worse off?
Here’s how…
The main reason for the differential rate is that PHEV drivers also pay existing fuel duty when they use their car’s internal combustion engine, whereas pure EV drivers don’t use petrol or diesel at all.
Since PHEVs still consume fossil fuels and thus contribute to fuel duty revenues, the per-mile charge is being set at a reduced rate to reflect that their owners are paying a combination of taxes. And it’s this fact that leads some to argue that plugin drivers are being hit the hardest; 1.5p per mile for those PHEV drivers who do most of their trips on electric power may seem reasonable enough. But for the types of PHEV drivers who largely depend on traditional fuel it feels much more like a double tax.
What other new taxes do EV and hybrid drivers have to pay?
Since April 2025, there have been VED changes in place for different types of electric vehicles, making this the second blow for this segment of drivers this year:
Hybrid and alternatively fuelled vehicles (AFVs):
The £10 annual discount for hybrid and AFVs has been removed. The rate you will pay depends on when the vehicle was first registered. If the vehicle was:
a) registered before 1 April 2017 - this rate will depend on the vehicle’s CO2 emissions (check the current rates for these vehicles)
b) registered on or after 1 April 2017 - you will pay the standard rate (£195)
Existing EVs:
For electric vehicles registered between April 1, 2017, and March 31, 2025, the standard annual VED rate of £195 applies.
New EVs (registered from April 1, 2025):
The first-year VED is the lowest rate (£10), after which the standard annual rate of £195 applies.
Electric, zero or low emission cars registered between 1 March 2001 and 31 March 2017:
The tax rate for these vehicles is £20.
Expensive EVs:
An “expensive car supplement” of £425 applies in addition, for five years to EVs with a list price over £40,000 registered from April 1, 2025. The government has raised the ECS threshold for EVs and from April 2026, the list price threshold at which electric cars are subject to this tax increases from £40,000 to £50,000, meaning a lot more buyers of new EVs can avoid the charge.
Are plug-in hybrid drivers really being hit the hardest?
The government has justified the measures as balancing the different fuel sources and tax contributions.
For drivers of plug-in hybrids however, it may feel like they’re being hit by a tidal wave of taxation consisting of the new charge, the new road tax and the ever-present fuel tax. Just how the goverment intend to introduce the scheme will be decided in a consultation which is currently underway. However it’s understood mileage will be self-declared, then checked annually, typically during an MOT.
While it’s impossible to say whether all plug-in hybrids will be disadvantaged, they arguably face a unique circumstance under the UK’s new pay-per-mile tax that may hit those with shorter electric-only ranges harder because on journeys that extend beyond their battery range, drivers will be charged both the 1.5p-per-mile tax and the tax on the petrol or diesel used. This could potentially make them less attractive vehicles for high-mileage drivers than they currently are. However numerous PHEV benefits remain in tact and even under the new rules, are a very attractive option for drivers who mostly complete short journeys on electric power.
Opinion from Wessex Fleet
This Budget might reshapes the landscape a little but it’s been designed to level the playing field while continuing to incentivise lower carbon emiting vehicles. Though running costs for EVs will rise, the changes are designed to be fairer across the board and address the need to tax drivers of all types of vehicles for road-use.
Now more than ever, fleets will benefit from leasing electric and hybrid vehicles rather than buying, allowing them to access predictable costs without the long-term risk. Let our fleet management experts conduct a whole life cost analysis for your fleet to decide which vehicles are the most cost-efficient for your drivers and their particular journeys. We can mix and match different types of vehicle through a whole panel of different funders across a host of manufacturers.
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