Budget 2025 – 3p mileage charge for EV’s

Budget 2025 – 3p mileage charge for EV’s

EV drivers face a pay-per-mile tax on their annual mileage, which is due to be added to road tax and monitored at MOTs.

The new tax on EV drivers from April 2028 will have a special electric vehicle mileage rate set at 3p per mile. But this will not affect petrol and diesel drivers.

This new tax will cost the average EV drive £240 per year on top of existing road tax. But experts have warned that this will have a hugely damaging impact on EV sales as drivers already face very expensive car prices in this market.

The so-called electric vehicle excise duty, a new mileage charge for electric and plug-in hybrid cars will come into effect from April 2028. Drivers will pay for their mileage alongside their existing road tax.

The mileage charge will be payable each year, at 3p per mile and 1.5p for plug in hybrids, although vans, buses, motorcycles, coaches and HGVs will be excluded initially.

The government is also increasing the threshold at which motorists with new electric vehicles must pay the expensive car supplement from £40,000 to £50,000, with effect from 1 April 2026.

A new eVED reporting and payment process will be integrated into the existing road tax system and administered by DVLA, and mileage will be checked at MOTs.

For new cars, dealerships will have the option to prepay and bundle eVED mileage into the on-road price of a car. Alternatively, the vehicle owner will be able to make their own arrangements and estimate their mileage for the remainder of the tax period, for eVED purposes.

For existing cars, at VED renewal each year, motorists will be prompted to enter their vehicle’s mileage reading and then estimate their mileage for the year ahead. Based on this estimate, an estimated annual eVED liability will be calculated by DVLA, using the applicable rate, the Treasury documents have stated.

Road charging on electric vehicles will hit the car industry by crushing demand for electric vehicles if the price of running one is so much higher than a traditional car.

If you are considering an electric vehicle for your business, get in touch with us to explore the options.