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The UK Government will start charging electric vehicle (EV) owners per mile starting in April 2028.
The new tax is meant to plug a massive financial gap that will be created with fuel duty revenues set to collapse as motorists switch to greener cars.
The policy immediately sparked an intense industry backlash. Manufacturers warn the tax will seriously undermine the net-zero transition.
How the Tax Works
The charge is simple: electric car drivers will pay 3p per mile. Plug-in hybrid drivers will pay 1.5p per mile. These rates will increase with inflation each year.
The Office for Budget Responsibility (OBR) estimates the EV rate is roughly half the fuel duty rate paid by petrol drivers.
The new system will be managed by the DVLA. It integrates directly into the existing Vehicle Excise Duty (VED) framework.
Drivers’ mileage will be checked annually. This usually happens during their MOT inspection. New vehicles face checks at their first two registration anniversaries.
The Treasury forecasts the tax will generate £1.1 billion in 2028-29. This is expected to rise to nearly £2 billion by 2030-31.
Sales Impact and Industry Outcry
The OBR itself predicts the tax will negatively impact EV adoption. It forecasts the increased lifetime cost will “reduce demand for electric cars.”
This charge is estimated to result in about 440,000 fewer EV sales.
Industry reaction was swift and critical. Ford and the SMMT both called the tax “the wrong measure at the wrong time.”
They argue the government is sending a confusing message. Taxing green cars undermines the 2030 ban on new petrol and diesel sales.
Many EV owners share the frustration. They feel penalized for investing in a cleaner technology.
Chinese Brands Launch Counterattack
The most aggressive response so far has come from new market entrants: Chinese brands Omoda and Jaecoo. They launched an immediate “EV Tax Rebate.”
The brands aim to nullify the tax’s financial impact for early customers.
Omoda and Jaecoo are offering a £600 rebate. This applies to cars bought via a 48-month finance agreement.
The rebate is explicitly designed to “cancel out the incoming 3p per mile road tax for 20,000 miles.”
The brands note the average EV travels 8,740 miles annually. At 3p per mile, the yearly tax bill is around £262.
The £600 rebate effectively covers the average driver’s road tax for more than two years upfront.
This aggressive pricing strategy is a fight for market entry. Chinese manufacturers are attempting to buffer their competitive advantage against government policy.
The new tax creates a clear conflict. The government needs road revenue, but the tax risks slowing the necessary transition to electric vehicles. Manufacturers are now scrambling for ways to mitigate the increased cost burden on consumers ahead of the introduction of the EV tax.
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