Reeves pay-per-mile tax: what the 3p a mile EV charge from April 2028 means for you

The pay-per-mile tax Rachel Reeves announced in her November 2025 Budget charges electric cars 3p a mile and plug-in hybrids 1.5p a mile from 1 April 2028, paid to the DVLA on top of normal road tax. A typical EV driver covering 8,000 miles a year will pay £240.

The tax is officially called Electric Vehicle Excise Duty, or eVED. Reeves confirmed it at the Budget on 26 November 2025, Business Car reported, and the current Chancellor, John Healey, kept it on course in his first Budget on 28 October 2026, according to What Car? and the RAC. Below is how it works, what it costs at different mileages, a worked example with real running costs, and what it means if you are choosing a car now.

How will pay-per-mile tax work?

eVED works through the road tax system you already use: when you renew, you give an odometer reading, estimate your miles for the year ahead and pay for them. The government’s July 2026 consultation response sets out the process:

1. Estimate. At each renewal from 1 April 2028 you give the DVLA an up-to-date odometer reading and an estimate of the coming year’s mileage. The DVLA works out the charge.
2. Pay. You can pay monthly, every six months or annually, through the same online service or Post Office counters as road tax. Direct Debit carries a 5% surcharge.
3. Check. The verified odometer reading taken at each MOT is used to check your figures. Cars too new for an MOT need no separate check, though the DVLA can require one if it suspects fraud.
4. Settle. If you drove more than you paid for, you make a balancing payment. If you drove less, the unused miles are ordinarily carried forward as credit, not refunded.

The Budget in October 2026 added a mileage estimation tool at launch and an opt-in service called eVED Connect, which uses the car’s built-in connectivity so you do not have to type in readings. The RAC reports eVED Connect has no confirmed launch date, and that an automatic refunds model will only be developed by 2030. Our report on why eVED refunds will not be automatic until 2030 puts pounds on what that means if you overestimate or sell mid-year.

How much will pay-per-mile cost drivers?

The cost is your annual mileage multiplied by 3p for an electric car or 1.5p for a plug-in hybrid, so an electric car covering 5,000 to 15,000 miles a year pays £150 to £450. The GOV.UK policy paper, updated on 28 October 2026, says the rates rise with CPI inflation from 2029 to 2030 onwards.

The government’s original consultation says 3p is about half the roughly 6p a mile the average petrol or diesel driver pays in fuel duty. The fuel duty column below applies that 6p average; it is a guide, not a bill, because duty per mile depends on a car’s economy.

Annual mileage	Electric car at 3p	Plug-in hybrid at 1.5p	Petrol or diesel fuel duty at about 6p
5,000 miles	£150	£75	about £300
8,000 miles	£240	£120	about £480
8,900 miles (average EV)	£267	£133.50	about £534
10,000 miles	£300	£150	about £600
15,000 miles	£450	£225	about £900
20,000 miles	£600	£300	about £1,200

The 8,000 mile row matches the government’s own example: £240 a year, or £20 a month, against £480 in fuel duty. The consultation puts average EV mileage at about 8,900 miles a year. One of the government’s worked examples assumes the 3p rate becomes 3.06p after the first year’s uprating, on 2% inflation, so treat the table as 2028 to 2029 prices.

Paying monthly costs a little more. The government’s example is £12.50 a month for 5,000 miles, or £13.12 by Direct Debit. On the same basis, the average EV driver’s £267 works out at £22.25 a month, or about £23.36 by Direct Debit.

Why is the government introducing pay-per-mile?

Because fuel duty is shrinking as drivers switch to electric. The consultation says fuel duty raised £24.4bn in 2024 to 2025 and is forecast to fall to around £12bn a year by the 2030s, and that by 2030 “around one in five car drivers are expected to pay no fuel duty at all”.

The Office for Budget Responsibility expects eVED to raise £1,115m in 2028 to 2029, rising to £1,885m in 2030 to 2031, according to the policy paper. It also estimates eVED and related Budget measures will cut electric car sales by about 120,000 between 2025 to 2026 and 2030 to 2031, around 2% of expected EV sales. About 5.6 million vehicles will be affected in the first year.

The industry is not persuaded. “Making a bad tax easier to administer doesn’t make it a good tax,” Toby Poston, chief executive of the BVRLA, told EV Fleet World after the 2026 Budget, calling eVED “the wrong tax at the wrong time”. Sue Robinson of the National Franchised Dealers Association said the mileage tax “risks making electric vehicle ownership less attractive”.

Our longer analysis of who pays most under eVED covers the rural gap and the tension with the ZEV mandate.

Worked UK example: a BYD Atto 3 at average mileage

For a driver who charges at home overnight, eVED will cost more than the electricity. We took a BYD Atto 3, with a 74.8 kWh usable battery and a 316-mile WLTP range, driven the government’s average of 8,900 miles a year.

Method: efficiency is WLTP miles divided by usable kWh (4.22 miles per kWh here), priced at Intelligent Octopus Go’s 6.5p a kWh, Ofgem’s October to December 2026 price cap of 26.32p and Zapmap’s October 2026 rapid average of 82p, ignoring charging losses. The full method is on our methodology page.

How the Atto 3 is charged	Energy per mile	Energy for 8,900 miles	eVED at 3p	Energy plus eVED	Per mile with eVED
Home, smart tariff at 6.5p	1.54p	about £137	£267	about £404	4.54p
Home, price cap at 26.32p	6.23p	about £554	£267	about £821	9.23p
Public rapid at 82p	19.41p	about £1,728	£267	about £1,995	22.41p

Three things stand out. On a cheap smart tariff, eVED is about two thirds of this driver’s combined energy and mileage tax bill, because 3p a mile is nearly double the 1.54p a mile the electricity costs. On the standard price cap, eVED adds about half again to the electricity bill. And for a driver who relies on rapid chargers, the tax is a small part of a much bigger cost, which is where the real gap lies.

Then add road tax. From its second year the Atto 3 pays the £200 standard rate shown in the GOV.UK rate tables, so the home smart tariff driver’s total comes to about £604 a year before insurance and servicing. See how our 6.5p figure compares with other tariffs in our guide to what charging costs on Octopus.

Common mistakes about pay-per-mile

Most of the confusion comes from five myths:

• “It replaces road tax.” It does not. eVED is paid alongside Vehicle Excise Duty, and electric cars already pay the £200 standard rate, plus £440 a year if they were registered from 1 April 2025 with a list price over £50,000. Our guide to road tax on an electric car explains the current rates.
• “Petrol, diesel and ordinary hybrids pay it too.” They do not. The consultation excludes hybrids that use only petrol or diesel as their external power source. Only cars that plug in are covered.
• “The government will track where I drive.” It will not. The consultation says there is “no requirement to report where and when miles are driven or install trackers in cars”, and eVED Connect is opt-in. Odometer fraud is another matter, as our report on eVED inspection powers explains.
• “Vans pay it.” Vans, buses, coaches and HGVs are out of scope at introduction, according to the consultation response.
• “It is the 45p mileage rate.” That is HMRC’s approved mileage allowance for business journeys, which GOV.UK shows rose to 55p for the first 10,000 miles in the 2026 to 2027 tax year. What Car? reports the rate above 10,000 miles rises from 25p to 35p from 6 April 2027. Neither has anything to do with eVED.

What does pay-per-mile mean for choosing a car?

eVED makes mileage and home charging matter more, but it does not reverse the case for an electric car if you can charge at home. In the government’s own comparison, an EV driver at 8,000 miles pays £240 a year against £480 in fuel duty for a petrol or diesel driver.

It matters most in four cases:

• High mileage. At 20,000 miles a year the bill is £600. Drivers covering long distances should cost eVED into any lease or PCP that runs past April 2028.
• No home charging. At 82p a kWh rapid, energy already dwarfs the tax. If you can fit a wallbox, Best Chargers compares home chargers and installation costs.
• Efficiency. eVED is a flat 3p whatever the car, so it does not penalise a thirsty EV more than an efficient one. Efficiency still sets the energy part of the bill.
• Buying used after 2028. Prepaid credit transfers with the car, the seller settles any unpaid miles before the sale, and the DVLA’s vehicle enquiry screen will show the paid mileage. Add that to our used EV buying checklist.

To see how far ahead an electric car stays across different mileages, use our EV savings against petrol by mileage guide, which works out what you save a year.

Should you choose a plug-in hybrid or go fully electric instead?

A plug-in hybrid pays half the eVED rate, but that does not make it the cheaper car to run. A BYD Seal U DM-i plug-in hybrid, with a 50-mile WLTP electric-only range from an 18.3 kWh battery, would pay £120 a year in eVED at 8,000 miles. Every mile beyond its battery is driven on petrol, which carries fuel duty at about 6p a mile on the government’s average.

If most of your trips fit within that electric range and you charge every night, the plug-in hybrid’s tax bill is the smaller one. If you regularly drive further, a fully electric car like the Atto 3 pays 3p a mile in eVED but avoids fuel duty and petrol altogether. Our comparison of hybrid and full electric cars goes through which suits which driver.

What to do next

Nothing changes until your first road tax renewal after 1 April 2028, but you can prepare now:

• Know your mileage. Your MOT history on GOV.UK records past odometer readings, which is the best basis for an honest estimate.
• Check finance deals. If a lease or PCP runs past April 2028, ask who pays eVED and who reports the mileage.
• Get on a smart tariff. At 6.5p a kWh, home charging keeps energy plus eVED under 5p a mile for an efficient EV.

Our view: eVED is a real new cost, and the BVRLA’s objection that it lands while the switch to electric is still fragile has weight. But at 3p a mile it is about half what petrol and diesel drivers pay in fuel duty, and for a driver who can charge at home overnight an electric car stays the cheaper car to run. The drivers who should think hardest are those covering high mileage without a driveway.