Key takeaways
- From April 2028, EV drivers will pay around 3p per mile, while plug-in hybrid drivers will pay around 1.5p per mile.
- For a typical driver covering around 8,500 miles per year, expect an additional £255–£260 annually, which may still be considerably cheaper than equivalent petrol or diesel fuel costs.
- The Expensive Car Supplement (ECS) threshold has increased, meaning more mid-range and premium EVs can avoid the surcharge.
- The Electric Car Grant has received an additional £1.3 billion of funding and will continue until 2029-30.
- For leasing customers and fleets, leasing remains an attractive EV acquisition model due to its flexibility and predictable costs.
New mileage-based road-tax charge
From April 2028, the UK government will introduce a new mileage-based road-tax charge for electric and plug-in hybrid vehicles. That means roughly 3p per mile for battery-electric cars and about 1.5p per mile for plug-in hybrids.
For context: if you drive around 8,500 miles a year, you’re looking at an extra £255–£260 annually before accounting for inflation or changes in your driving habits. That’s roughly half the per-mile cost compared with traditional fuel duty for petrol or diesel cars. Electric vans, trucks and motorcycles will initially be exempt from the charge.
This fee will come on top of existing taxes such as Vehicle Excise Duty (VED), so the total cost of running an EV will increase somewhat from 2028 onwards.
That said, this isn’t the end of EVs. What the government is doing is shifting from taxing fuel to taxing usage. As more drivers move away from petrol and diesel, it’s only natural that road use needs to be accounted for differently.
What the new ppm rate of 3p will actually mean in practice:
| Miles per annum | Total charge at 3ppm | Total charge at 1.5ppm |
|---|---|---|
| 5,000 | £150 | £75 |
| 8,000 | £240 | £120 |
| 11,000 | £330 | £165 |
| 14,000 | £420 | £210 |
| 17,000 | £510 | £255 |
| 20,000 | £600 | £300 |
Drivers will be expected to self-report their mileage by estimating the distance they will travel each year and either paying upfront or paying monthly via Direct Debit.
This mileage will be checked annually, either via existing MOT tests or, for newer vehicles, through an annual verification process that could be carried out at MOT stations.
How the “Luxury / Expensive Car Supplement” (ECS) has changed and what that means for electric car buyers
High-spec EVs with a list price above £40,000 have been subject to the additional road-tax surcharge known as the Expensive Car Supplement (ECS).
The good news is that the government has raised the ECS threshold for EVs. From April 2026, the list-price threshold for electric vehicles increases from £40,000 to £50,000, meaning many more buyers of new EVs can avoid the charge. In practice, that makes switching to electric more accessible, particularly for those considering newer or more premium EV models.
The Electric Car Grant is here to stay
The Electric Car Grant (ECG) is still in place, giving discounts on many eligible new EVs and helping bring down the overall cost of going electric. The government is increasing funding for the Electric Car Grant by £1.3 billion and extending the scheme until 2029-30 to help more drivers make the switch. Last week, the new Nissan LEAF was confirmed to be eligible for the full £3,750 ECG. We're expecting this to be a 2026 bestseller, and it’ll be available to order in a few weeks.
See the full list of grant-eligible cars here.
Our view
The electric vehicle revolution isn’t slowing. It's evolving.
This Budget doesn’t kill the EV future. It reshapes the rules. Yes, running costs for EVs will rise. But the changes are designed to be fairer across the board by taxing road use rather than fuel, helping fund infrastructure as EV adoption grows and adjusting thresholds to reflect real-world EV prices.
For individuals, businesses and fleets alike, electric car and van leasing remain smart and flexible ways to stay ahead. If you want predictable costs, minimal long-term risk and the ability to adapt as policies evolve, leasing continues to make a lot of sense.
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