What we really know about the new car tax. Read more...

What we really know about the new car tax in the UK

There’s been a flood of talk about a “new car tax” coming to the UK. Some people think it starts this year, some think it only applies to electric cars, and others think it’s a huge new cost for everyone.

Below is a straightforward explanation of what’s actually confirmed, what’s still being planned, when each change starts, and which vehicles will be affected.

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The quick summary

• Electric cars started paying Vehicle Excise Duty (VED) from 1 April 2025. They are no longer fully exempt.
• A new pay-per-mile road tax for electric and plug-in hybrid cars is planned to begin in April 2028.
• The Expensive Car Supplement threshold for EVs is being increased to £50,000 (with transitional rules starting from 2025–2026).
• Petrol and diesel cars are NOT getting a new mileage charge at this time.
• Exact per-mile costs for 2028 are still being decided.

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1. The timeline — what happens and when

1 April 2025 — EVs begin paying VED

Electric cars used to be in the “£0 tax” band. That ended on 1 April 2025. From this date, electric vehicles (new and existing) started paying the same general VED structure as other cars.

1 April 2026 — Expensive Car Supplement changes

The price threshold for very high-value electric cars increases to £50,000. Above that, buyers will pay an extra supplement for the first 5 years of ownership (similar to how it works for petrol/diesel cars today, but with a higher threshold).

April 2028 — pay-per-mile tax for EVs and PHEVs starts

This is the big one.
The government has announced that electric vehicles and plug-in hybrids will start paying a mileage-based tax from April 2028.

The purpose is to replace the fuel duty that EV drivers don’t currently pay, since they don’t buy petrol or diesel. The exact price per mile is still being finalised.

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2. What we know 100% for sure

These points are already confirmed government policy:

EVs will no longer be exempt from annual VED starting 2025.

You will pay some level of annual tax depending on your car’s band.

A mileage-based charge for EVs and plug-in hybrids is scheduled for April 2028.

This is government policy and goes through consultations before being finalised.

The “Expensive Car Supplement” for EVs will use a £50,000 threshold.

More expensive EVs will pay the extra supplement for 5 years after registration.

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3. What is not final yet (still under consultation)

The government is still deciding on:

• Exact price per mile
  (Media commonly reports example figures like 3p per mile for EVs and 1.5p for PHEVs, but these are examples only.)
• How mileage will be tracked
  Options include annual declarations, digital odometer readings, MOT data, or connected-car data.
• Exemptions or discounts
  For example: rural drivers, disabled drivers, taxis, or classic vehicles.
• Rules for second-hand EVs
  The intention is that the tax follows the car, not the first owner — so even used EVs would pay per-mile once the system starts.

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4. What will it cost? (Realistic examples)

VED from 2025

Electric cars will now pay an annual VED charge similar to petrol/diesel cars.
The typical “standard” rate after the first year is around the same amount most petrol/diesel owners currently pay.

Mileage charge from 2028 (example estimates)

Because the government hasn’t confirmed final numbers, we can only illustrate using the values that have been publicly discussed:

If the rate were 3p per mile for an EV:

• 5,000 miles/year → £150
• 8,000 miles/year → £240
• 10,000 miles/year → £300
• 12,000 miles/year → £360

Plug-in hybrids would likely pay a lower rate per mile because they still pay some fuel duty when running on petrol.

These are just example figures — not yet final.

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5. Which cars will be affected?

Battery-electric cars (BEVs)

• Affected by VED from April 2025
• Will definitely be included in the new mileage tax from April 2028

Plug-in hybrids (PHEVs)

• Continue to pay normal VED
• Will also be included in the mileage charge from 2028, though likely at a lower rate

Petrol and diesel cars

• No new mileage charge has been announced for them
• They continue paying fuel duty (which works as a per-mile tax already)

Hydrogen fuel-cell cars

• These count as “zero-emission”
• Expected to fall under the EV rules, but final 2028 details will confirm this

Used cars, classic cars, older cars

• VED rules already apply depending on registration date
• Mileage tax in 2028 is expected to apply to any zero-emission or plug-in hybrid car still on the road

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6. Why the government is doing this

Petrol and diesel drivers contribute a lot of tax through fuel duty.
Electric vehicle drivers don’t pay fuel duty, so as more people switch to EVs, the government loses billions in revenue.

The mileage tax is designed to:

• Replace declining fuel duty
• Make EV drivers contribute to road upkeep
• Keep overall government transport funding stable

In short: if cars stop using fuel, the government wants to charge based on miles instead.

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7. Quick practical examples

You drive a 2022 Tesla Model 3

• From 2025: you start paying annual VED
• From 2028: you’ll pay per mile driven

You drive a 2020 petrol Fiesta

• Nothing changes for you
• You keep paying VED + fuel duty as usual

You are thinking of buying an EV in 2026

• Expect annual VED
• Expect mileage tax from 2028
• Still cheaper to run than petrol/diesel in most cases, but not tax-free anymore

Your EV cost more than £50,000

• You may pay an extra supplement for 5 years
• Only applies to newer vehicles after the threshold date

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Summary Checklist: How Much Will You Pay?

Vehicle Type	Registered Date	Annual Tax (From April 2025)
New Electric Car	On/After 1 April 2025	£10 (Year 1), then £195/yr
Existing Electric Car	Apr 2017 – Mar 2025	£195/yr
Old Electric Car	Mar 2001 – Mar 2017	£20/yr
Hybrid / PHEV	On/After Apr 2017	£195/yr (Discount removed)
Petrol / Diesel	On/After Apr 2017	£195/yr
Luxury EV (>£50k new)	On/After 1 April 2025	£620/yr (Years 2-6 only)
Luxury ICE (>£40k new)	On/After 1 April 2017	£620/yr (Years 2-6 only)

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Final thoughts — what to watch next

• The final per-mile rate will be the biggest factor for running costs and is still undecided.
• The method for recording mileage (MOT? app? odometer check?) will matter for privacy and ease of use.
• If you’re planning to buy an EV, assume you’ll pay annual VED from 2025 and a mileage charge from 2028, but EVs may still be much cheaper to run day-to-day.

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