Electric vehicle running costs are changing, but these updates are largely about bringing EV taxation in line with the long-established system used for petrol and diesel vehicles. For years, EVs avoided major motoring taxes such as Vehicle Excise Duty (VED), fuel duty and the Expensive Car Supplement. As EV adoption grows, the government is now reshaping the tax system so that electric cars contribute in a similar way to traditional vehicles.
A key difference is that EVs do not use petrol or diesel, meaning they don’t pay fuel duty — a major source of UK motoring tax revenue. The upcoming mileage-based charge from 2028 is effectively the replacement for fuel duty, ensuring EVs make a comparable contribution as road usage increases.
To understand where EV taxation is heading, it helps to look at how the current system works for electric, petrol and diesel cars registered after April 2017. Their first-year VED is based directly on CO₂ emissions, which means some vehicles face very high upfront costs at registration. For example, cars emitting over 255g/km face a first-year charge of £5,490, while low-emission petrol cars (51–75g/km) pay £130 and ultra-efficient models (0g/km) pay just £10 in the first year. After this initial payment, all vehicles — petrol, diesel, hybrid and electric — move to the same standard annual rate of £195.
This long-standing structure forms the basis for the EV tax changes coming over the next few years. Instead of remaining in a separate “incentivised” category, electric vehicles are now being integrated into the broader tax system that has applied to combustion-engine vehicles for nearly a decade.
How This Relates to Electric Vehicles
These changes matter because electric vehicles are now being fully integrated into the UK’s vehicle taxation system.
Since April 2025, electric cars have been paying Vehicle Excise Duty (VED) for the first time. This marked the end of their long-standing exemption and confirmed that EVs are no longer treated as a tax-free alternative to petrol and diesel vehicles. While this shift was expected, it represents a significant change in the overall cost of EV ownership.
A key issue has been how the Expensive Car Supplement (ECS) applies to electric vehicles. Under the existing rules, cars with a list price above £40,000 are subject to the supplement. Because new electric vehicles are more expensive on average than petrol or diesel equivalents, this threshold has disproportionately affected EV buyers — often capturing family cars and SUVs rather than genuine luxury models.
To address this, the government announced in the Autumn Budget that the ECS threshold for electric vehicles only will increase to £50,000 from April 2026. This change better reflects current EV pricing and reduces the financial penalty for drivers choosing higher-priced electric models that are not necessarily luxury vehicles.
Alongside VED and ECS changes, the government is also preparing to replace declining fuel duty revenues. From April 2028, a mileage-based charge will be introduced:
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Electric vehicles: 3p per mile
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Plug-in hybrids: 1.5p per mile
For an electric vehicle driver covering 10,000 miles per year, this would add around £300 annually to motoring costs. Plug-in hybrid drivers would face an additional £150 per year.
This is another cost being added at a time when lower running costs have traditionally been one of the main benefits of electric vehicles. As these advantages diminish, the financial incentive to switch from petrol or diesel becomes less compelling for many motorists.
Overall, these measures do not make electric vehicles unaffordable, but they clearly signal a shift in policy. As the EV market matures, the government is moving away from generous incentives and towards a system where electric vehicles are taxed much more like conventional cars.
Learn How the Mileage-Based Charge Will Work
What This Means for UK Drivers
Drivers switching to electric cars won’t face the extreme first-year charges seen with high-polluting petrol models. In fact, even with the new tax changes, electric vehicles remain far cheaper in the first year of ownership and often in the years that follow.
The key difference is that EVs are losing the completely tax-free advantage they previously enjoyed. Running costs will still be lower for many drivers, especially those who mainly charge at home, but the gap between EV and petrol or diesel ownership is narrowing.
With the UK still planning to end the sale of new petrol and diesel cars by 2035, the long-term direction of travel is clear. As electric vehicles become the dominant type of car on the road, they will gradually take on similar tax responsibilities to those that petrol and diesel owners have been paying for decades.
The charging infrastructure across the UK is growing rapidly, keeping up with the increasing demand for electric vehicles on the road. At the end of November 2025, there were 87,168 electric vehicle charging points across 44,326 locations, totalling 116,016 EVSE units and 121,364 connectors. According to Zapmap, the public charging network has grown by 18% since November 2024.
As of late 2025, there are over 1.7 million fully electric cars (BEVs) on UK roads, making up around 5% of all cars. Adoption continues to rise quickly, with new fully electric registrations increasing by more than 40% in early 2025.
Depreciation (EV values stabilising but still unpredictable)
There is still uncertainty surrounding long-term depreciation, especially for fleet operators who rely on accurate whole-life cost predictions. While the EV market has become more stable, the lifetime value of electric vehicles can still vary widely depending on battery performance, software support, charging capability, and overall demand in the used market. This makes forecasting future resale values more difficult than with petrol and diesel vehicles, and it’s one of the key reasons many fleets prefer leasing, as it removes the risk of unpredictable depreciation.
Environmental and Zone-Based Benefits
Clean Air Zones (CAZ) and Low Emission Zones (LEZ) are designated areas in the UK where vehicles must meet minimum emission standards to enter without paying a charge. These zones have been expanding rapidly across major towns and cities as part of the government's wider Air Quality Plan, which aims to reduce pollution and encourage cleaner forms of transport.
For many drivers, these zones make electric vehicles far more practical and cost-effective. Higher-emission petrol and diesel cars can face daily charges in cities such as London, Birmingham, Bristol and Sheffield, which can add up to hundreds of pounds per month for regular commuters. EVs, on the other hand, remain exempt from these charges, giving them a significant financial advantage for drivers who travel through these areas frequently.
As more CAZ and LEZ schemes are introduced, the cost gap between zero-emission vehicles and older, higher-polluting cars becomes even more noticeable. This growing network of clean air policies is one of the key reasons the shift toward electric cars is accelerating, particularly for businesses and fleet operators who regularly enter regulated zones.
