URGENT UPDATE: Electric vehicle (EV) drivers are bracing for a new £243 annual charge following the government’s Budget announcement of a pay-per-mile tax set to take effect in April 2028. This groundbreaking decision has raised concerns among EV owners as they prepare for significant financial changes.
According to car insurance experts at MoneySuperMarket, this new tax will impose a rate of 3p per mile on fully electric cars, translating to an estimated additional cost of £243 per year for the average driver who covers 8,116 miles annually. The proposed tax also introduces a 1.5p per mile charge for plug-in hybrid vehicles.
This decision comes as the UK government aims to encourage greener transportation methods while balancing taxation across vehicle types. Despite the impending charge, experts assert that owning an EV will still be more economical than traditional petrol or diesel vehicles. Currently, drivers of petrol and diesel cars face an average annual fuel duty of approximately £600.
Kara Gammell, personal finance and car insurance expert at MoneySuperMarket, stated, “While the introduction of this new tax may feel like a setback for many electric vehicle drivers, it’s important to keep the bigger picture in mind. Even with this additional cost, EVs are still expected to have lower running costs compared to petrol and diesel cars.”
To assist drivers in calculating their potential yearly expenses, MoneySuperMarket has launched an electric pay-per-mile calculator. This tool will allow individuals to estimate how much they could pay based on their specific vehicle type and driving habits.
In addition to the new tax, recent data reveals that insurance costs for electric cars have dropped by about £137 since March 2025, bringing average premiums down to £587. This shift makes EV insurance costs nearly equivalent to those for petrol and diesel vehicles, presenting a more attractive option for potential buyers.
As the April 2028 deadline approaches, current and prospective EV owners are urged to prepare for these changes and consider the long-term financial implications. With the rising popularity of electric vehicles, this new taxation could significantly impact driving habits and future vehicle purchases.
Stay tuned for further updates on this developing story as more details emerge regarding the implementation of the pay-per-mile tax and its effects on the EV market.
