UK introduces pay‑per‑mile electric vehicle tax, raising costs for drivers

The UK government confirmed that a new Electric Vehicle Excise Duty (eVED) will be introduced on 1 April 2028. The mileage‑based charge will be 3 p per mile for battery‑electric vehicles and 1.5 p per mile for plug‑in hybrids, applied alongside the existing Vehicle Excise Duty. The Treasury expects the scheme to raise more than £1 billion in its first year and to affect around 5.6 million vehicles.

Addison Lee warned that the levy could increase operating costs for its drivers by up to £840 a year for electric‑vehicle operators and £420 for plug‑in hybrids, on top of the loss of London’s congestion‑charge exemption, which already adds about £4,700 annually. The company argued the uniform pay‑per‑mile charge places a disproportionate burden on the private‑hire sector.

Industry experts also cautioned that eVED may undermine salary‑sacrifice schemes that enable lower‑paid workers to lease EVs through their employers. The additional per‑mile charge could push some drivers below the National Minimum Wage, potentially forcing them out of these schemes when the tax takes effect.