Today, the Autumn Budget 2025 was announced, bringing a range of changes for motorists. One of the main talking points was the introduction of a mileage-based charge for electric and plug-in hybrid vehicles, which will come into effect in April 2028.
The move is designed to ensure that all drivers contribute to road maintenance, even as more people switch to low-emission vehicles. This policy has sparked debate among drivers and industry experts alike, with many discussing how it could impact the future of electric vehicle ownership.
This marks a major shift in how zero-emission vehicles will be taxed in the UK, and naturally it has raised a lot of questions. What will it cost? Who will be affected? And why now?
In this article, we break down exactly what was announced, how the charge will work, and what drivers and businesses need to prepare for.
This update comes at a time when many electric car drivers already feel they are being asked to pay more each year. In 2025, EV owners started paying VAT on public charging and they also lost their exemption from VED. Now they are being told that a mileage-based charge will arrive in 2028.
A lot of people who chose an electric vehicle because of the incentives feel that these benefits have now faded. The support that once helped drivers make the switch is not as strong as it used to be, and the overall cost picture is changing quite quickly.
The Office for Budget Responsibility (OBR) has estimated that the mileage-based charge will be set at 3 pence per mile for battery-electric vehicles and 1.5 pence per mile for plug-in hybrids during the 2028–2029 financial year. The lower rate for plug-in hybrids reflects the fact that these vehicles will continue to pay fuel duty on the petrol they use, reducing the need for a higher per-mile charge.
According to the OBR, an electric car driver who travels 8,500 miles a year would pay around £255 in mileage charges. That’s roughly equivalent to half the fuel duty currently paid by petrol and diesel drivers for the same distance.
The OBR also predicts that the new charge will raise £1.1 billion in its first year, increasing to £1.9 billion by 2030.
The OBR has warned that the new mileage charge is likely to reduce demand for electric vehicles in the UK. They estimate that around 440,000 fewer EVs will be sold over the next five years as a direct result of this policy. Some incentives are expected to offset this effect, bringing the net reduction down by around 130,000 vehicles, but overall the impact on adoption is still negative.
EV Growth and Market Share
EV uptake has grown steadily over the past decade. As of October 2025, the UK has over 1.7 million fully electric cars on the road. That represents 5.09% of the roughly 34 million cars in use. To put that into context, in 2012 only 1.2% of cars were electric. The progress is clear, but this new charge may slow that momentum by making EVs less attractive for some drivers.
So far in 2025, 386,244 new fully electric cars have been sold, giving EVs a 22.4% share of all new registrations. That is 86,511 more than the same period last year, showing that growth is still positive. Zapmap data supports this steady rise, although the pace varies by segment and manufacturer, especially with the pressure of the UK’s Zero Emission Vehicle (ZEV) mandate.
The ZEV mandate requires 52% of all new cars sold in 2028 to be fully electric. Current forecasts, however, suggest that adoption will reach only 36%, leaving a shortfall of more than 345,000 vehicles. These projections were made before the mileage-based charge was announced, meaning the actual gap could be even wider once the new policy is factored in.
What Will This Cost an EV Driver?
For an electric vehicle driver covering 10,000 miles a year, the new charge would add £300 to their annual motoring costs. For plug-in hybrid drivers, the cost would be £150 a year.
This is another cost drivers will face at a time when one of the main benefits of electric vehicles has always been their lower running costs. Each year, the gap between EV running costs and traditional fuel vehicles becomes smaller, which makes the incentive to switch less attractive for many motorists.
How the Mileage-Based Charge Will Work
The government has not yet confirmed exactly how the mileage charge will be monitored or enforced, with full details expected closer to its introduction in 2028. However, it is understood that there will not be a tracker installed in vehicles. Instead, drivers will estimate their mileage for the year. If they overestimate, a refund will be issued; if they underestimate, the difference will be added to their vehicle excise duty (VED).
The pay-per-mile system will become part of the existing VED system operated by the DVLA and will be known as “eVED.” Mileage will typically be checked annually, often during the MOT, or for new cars, around their first and second registration anniversaries.
For new electric vehicles that are not yet required to have an MOT, dealerships will have the option to pre-pay and bundle the eVED mileage charge into the on-road price of the car. Vehicle owners will also be able to make their own arrangements and estimate their mileage for the remainder of the tax period for eVED purposes. The responsibility for payment will rest with the registered keeper of the vehicle.
The mileage-based charge wasn’t the only motoring update in this year’s Budget. The Luxury Car Tax threshold has been raised by £10,000, the first increase since it was introduced in 2017. Back then, the threshold was set at £40,000 and has remained unchanged ever since, even as new car prices have risen significantly. This adjustment will come as welcome news to many, as it better reflects today’s vehicle market and reduces the number of everyday cars caught by the charge.
Potential Impact on EV Adoption
While this new mileage charge does not prevent anyone from choosing an electric vehicle, it has raised concerns about whether it could slow the pace of EV adoption in the short term. Some existing EV drivers have already expressed that the recent changes — including the loss of VED exemptions, VAT on public charging, and now a mileage-based charge — make owning an EV feel less attractive than in previous years.
For people who were considering switching soon, these extra costs may cause them to wait longer or explore their options more carefully. It does not mean adoption will stop, but it could lead to a slower rate of growth than previously expected.
At the same time, the phase-out of new petrol and diesel vehicles continues to move closer, which means that in the long run, moving to electric will become the default route for most drivers. Over the next few years, we will see whether these changes influence behaviour or simply shift the timing of when people make the transition.
