UK Budget’s New EV Mileage Tax Undercuts Case for Plug-In Hybrids

Rather than incentives, new measures impose per-mile charges and higher luxury-vehicle levies on electric and hybrid drivers

The 2025 Budget unveiled by the UK government has introduced a new mileage-based road tax for electric vehicles — three pence per mile for battery-electric cars and one and a half pence per mile for plug-in hybrids — to take effect from April 2028. This move replaces revenue previously raised through fuel duty, which the government has frozen until September 2026.

Under the new system, average drivers of battery-electric cars — covering roughly eight thousand five hundred miles per year — could face annual road charges in the region of £255.

Rather than lowering costs, the new tax is intended to ensure that all motorists, regardless of fuel type, contribute fairly to road funding as electric-vehicle usage rises.

The Budget also alters the “Expensive Car Supplement” (the UK’s luxury-vehicle tax), raising the threshold from which it applies to electric and plug-in hybrid cars to £50,000.

While this eases a cost burden for high-end electric vehicles, it does not offset the added per-mile levy that affects all electric and hybrid car users.

Overall, the package does not reinstate financial incentives for plug-in hybrids or electric vehicles; instead, it furthers a shift toward usage-based taxation, which may blunt the economic argument for purchasing such vehicles — especially for those travelling substantial annual distances.

In light of these changes, claims that the Budget “makes plug-in hybrids logical again” are unsupported by the newly announced measures, which critics argue instead re-level the taxation playing field between electric, hybrid and petrol cars.