Imagine you’ve just spent £40,000 on a shiny new electric car, partly because the government kept telling you it was the future – cheaper to run, zero road tax, the works. Fast forward to 2028 and every single mile you drive is suddenly going to cost you money. That’s not a dystopian movie plot; that’s the reality the Chancellor just confirmed.
Last week’s Autumn Budget quietly dropped one of the biggest motoring shake-ups in decades. From April 2028 electric vehicle owners will pay a new per-mile levy designed to replace the billions the Treasury is losing as we all ditch petrol and diesel. And yes, it feels a bit like being sold the dream and then handed the bill afterwards.
The End of the Free Ride for Electric Cars
For years the deal was simple: buy an EV, pay zero vehicle excise duty, save a fortune on fuel, and feel smug about the planet. That deal is officially over.
The new system is straightforward, almost brutally so. Fully battery-electric cars will pay 3 pence for every mile driven. Plug-in hybrids get a discounted rate of 1.5p because they still burn some petrol and therefore still contribute fuel duty. Both rates will rise each year with inflation.
To put that into real money: the average British motorist clocks around 8,500 miles a year. That works out at roughly £255 annually for a full EV driver in the first year – and it goes up from there. Not catastrophic, perhaps, but definitely noticeable when you thought your biggest motoring expense would be the occasional charging cable.
How Does It Compare to Petrol and Diesel Today?
Let’s be honest – the government isn’t suddenly being mean to early adopters for fun. Fuel duty has been frozen at 52.95p per litre since 2011. Every year more drivers switch to electric, the Treasury loses another chunk of revenue it used to bank on automatically.
The new 3p-per-mile rate is deliberately set at roughly half what an average petrol car pays in fuel duty per mile right now. So in theory EV drivers are still coming out ahead – just not by as much as before.
“Every EV sold is one fewer that’s visiting petrol stations and pumping money into Treasury coffers.”
– Motoring journalist Steve Walker
How on Earth Will They Measure It?
This is the bit that makes most people scratch their heads. The current plan is refreshingly low-tech: you simply declare your mileage when you get your MOT. No black boxes, no GPS tracking, no Big Brother stuff – at least for now.
Of course, that raises obvious questions. What if you do a lot of driving abroad? What about company car drivers who already have accurate mileage records? The consultation is ongoing, but ministers insist they want the simplest possible system that doesn’t require expensive kit in every car.
The Numbers Behind the Decision
The fiscal watchdog doesn’t mince words. They expect the new charge to raise £1.1 billion in its first full year (2028-29) and almost £2 billion a year by the end of the decade. That’s serious money – enough to make even the greenest politician think twice about keeping EVs completely tax-free forever.
Perhaps more worryingly, the same forecasts predict around 440,000 fewer electric cars will be sold by 2030 because of the increased lifetime cost. In other words, the policy designed to plug a tax hole might accidentally slow down the very transition it claims to support.
- 2028/29 – £1.1 billion raised
- 2030/31 – £1.9 billion raised
- Expected drop in EV sales – 440,000 units by 2030/31
- Average annual bill for 8,500 miles – £255 (rising with CPI)
Trying to Soften the Blow
It’s not all bad news. The Chancellor extended the electric vehicle grant scheme (the one that gives you thousands off the purchase price) until at least 2030. Salary sacrifice schemes – probably the single cheapest way to run a new EV – are safe too, despite months of nervous rumours.
Whether that’s enough to keep the uptake on track is anyone’s guess. Industry reaction has been, shall we say, mixed.
“This confused policy approach will shake consumer confidence and potentially jeopardise investment in the sector at a critical moment.”
– Melanie Lane, CEO of a major charging network
What This Really Means for Anyone Thinking of Going Electric
If you’re buying in the next couple of years, you’ll still enjoy several years of more-or-less free motoring before the levy kicks in. That’s actually not a bad window – most people keep cars four to six years anyway.
Longer term, though? The maths changes. High-mileage drivers – think sales reps, rural families, anyone doing 15,000+ miles a year – will feel it most. Suddenly a diesel starts looking strangely competitive again on running costs alone.
And that’s before we even get into the psychological impact. For years the messaging has been “electric is cheaper”. Turning round and saying “actually it’s cheaper… until 2028, then you’ll pay per mile” feels like classic political goalpost-moving.
Is This the Thin End of the Wedge?
Here’s the question nobody in government wants to answer properly yet: once the system exists for EVs, what’s to stop it being rolled out to everyone? After all, fuel duty is politically toxic – every time a chancellor tries to raise it, they get monstered.
A pay-per-mile framework that already covers millions of electric cars by the mid-2030s could, in theory, be extended to petrol and diesel too. Different rates for different emissions, peak-time congestion premiums, rural discounts – the possibilities are endless once the principle is accepted.
I’m not saying that’s definitely the plan. But if you were a cash-strapped future chancellor looking for a fairer, less politically painful way to tax driving… well, the infrastructure would already be there, wouldn’t it?
Final Thoughts – Should You Still Buy an EV?
Honestly? For most people, yes – at least for now. The savings on fuel versus petrol or diesel are still massive, even after the new levy. Charging at home remains dramatically cheaper than filling up, and you still avoid the London ULEZ, Clean Air Zones, and all the rest of it.
But the days of electric cars being a financial no-brainer are drawing to a close. From 2028 onwards going green will still be cheaper than the old way – just not by as much, and with a lot more small print.
Welcome to the new reality: the government needs your money, and eventually it will find a way to get it – even if you’re driving the most environmentally friendly car on the road.
