Chancellor Rachel Reeves has delivered the Autumn Budget, confirming that electric and plug-in hybrid car drivers will move to a pay-per-mile system from 2028. Here’s what motorists need to know.
The Budget outlines a new road-pricing model for EVs and plug-in hybrids, which will add extra costs for many drivers. However, the electric car grant scheme has been extended until 2030, and fuel duty will remain frozen until 2026. Below is a summary of the key motoring announcements.
Pay-per-mile tax for EVs and plug-in hybrids
From April 2028, electric cars will be charged 3p per mile, while plug-in hybrids will be charged 1.5p per mile. This new system is designed to replace falling fuel duty revenue as more people move to electric vehicles.
These charges will sit on top of existing vehicle excise duty, currently £195 per year for EVs and PHEVs.
According to the Budget documents, EV and PHEV drivers will still pay roughly half of what petrol and diesel drivers contribute through fuel duty. For example, an EV covering 8,000 miles a year will pay £240, while a plug-in hybrid will pay £120.
Higher Expensive Car Supplement threshold for EVs
The Expensive Car Supplement threshold for electric cars is rising from £40,000 to £50,000. This change will remove the extra £425 per-year charge (increasing to £440 in 2026) from many mainstream EVs that previously fell above the old limit.
Because electric cars typically cost more than petrol models, the previous threshold meant even ordinary family EVs were hit with this additional tax. Raising it to £50,000 should make more models affordable, with the government estimating savings of £440 per year for over a million drivers.
Fuel duty frozen until 2026
Fuel duty will remain frozen at 57.95p per litre until September 2026, extending a freeze that has now lasted 15 years. The temporary 5p-per-litre cut introduced in 2022 also remains in place, keeping the real rate at 53.95p per litre.
This discount will begin to be phased out from September 2026, with fuel duty rising in line with inflation from April 2027.
Electric car grant extended to 2030
The government’s electric car grant has been extended for two more years and will now run until 2030. The scheme offers up to £3,750 off a new EV, although only four models qualify for the full amount. More than 40 cars qualify for the lower £1,500 grant.
