Autumn Budget: Pay Per Mile and Other Big Takeaways
The 2025 Autumn Budget has landed and brought with it a number of important updates for UK motorists – especially for drivers of Battery Electric Vehicles (BEVs) and Plug-in Hybrid Vehicles (PHEVs). While the introduction of a new pay-per-mile tax understandably grabbed headlines, the Budget also delivered several pieces of good news that make electric driving more appealing. Here’s a clear rundown of what’s changing.
Continued Support for EVs
A further £200 million has been allocated to accelerate the rollout of public charging points, helping keep the UK on track for its 300,000-charger target by 2030. The funding also supports the installation of home and workplace chargers, making it easier for more drivers to make the switch to electric. Altogether, it signals that expanding and improving the nation’s charging network remains a clear government priority.
Updated Expensive Car Supplement for EVs: Now £50,000
Electric vehicle buyers will also benefit from a welcome tax update. From April 2026, the price threshold at which EVs become liable for the Expensive Car Supplement (ECS) will rise from £40,000 to £50,000.
This means many electric models priced between £40,001 and £50,000 will no longer incur the additional £425 per year surcharge applied for five years after a car is first registered. Petrol, diesel and traditional hybrid models will continue to be assessed against the £40,000 threshold, giving mid-priced EVs a clearer tax advantage.
Extension of the Electric Car Grant
The government has also extended support through the Electric Car Grant, which provides up to £3,750 off eligible electric models. Additional funding keeps the grant running until 2030, providing more certainty for buyers considering entry-level or mid-range EVs.
Fuel Duty Freeze
For petrol and diesel drivers, there is stability in the short term. The Chancellor confirmed that the current fuel duty freeze will remain in place until September 2026. From April 2027, however, the temporary 5p-per-litre cut introduced in 2022 will begin to be reversed, and fuel duty will once again rise in line with the Retail Prices Index (RPI). This means fuel prices are expected to increase steadily from 2027 onwards as duty levels return to their earlier trajectory.
Pay Per Mile: What the Budget Confirms
One of the biggest structural changes announced was the introduction of eVED, a new mileage-based road charge for electric and plug-in hybrid cars starting April 2028:
- 3p per mile for BEVs
- 1.5p per mile for PHEVs
- Initially, the scheme will not apply to electric vans, trucks, buses or motorcycles
This new charge will sit alongside existing Vehicle Excise Duty (VED) rather than replacing it.
OBR analysis suggests that a typical EV driving around 8,500 miles per year would pay roughly £255 annually. Even with this extra cost, BEVs are still expected to remain more economical than petrol cars, with annual running-cost savings of around £1,000. The 3p-per-mile rate is also roughly half the effective fuel-duty cost petrol and diesel drivers currently pay per mile (around 6–7p).
How the eVED System Is Expected to Work
Although final details will come after the government completes its consultation, the proposed system is designed to fit easily into existing processes. Each year, when renewing vehicle tax, drivers will estimate their expected annual mileage and submit it online through the DVLA. Payments can then be made monthly or annually.
The government has confirmed that no GPS trackers or in-car monitoring will be used. Instead, mileage is likely to be verified through routine checks such as MOT odometer readings or an equivalent process for newer vehicles. For brand-new cars, dealers may also be able to include the first year of eVED within the vehicle’s on-the-road price.
Summary
The Autumn Budget sets out a major shift in how low-emission motoring will be taxed in the future. Pay-per-mile charging for EVs and PHEVs will become part of everyday driving from 2028, but this change is balanced by strong support measures — including a higher ECS threshold for electric cars, extended grant funding and substantial investment in charging infrastructure. Petrol and diesel drivers will see continued stability until 2026, followed by gradual increases in fuel duty from 2027.
Taken together, the Budget marks a transition towards taxing road use rather than fuel consumption, while reinforcing the UK’s long-term commitment to electric mobility.
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