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The latest Budget has introduced several changes that will affect both current electric car owners and anyone thinking about switching to an EV. Some updates start soon, while others come in later, so this guide breaks everything down in a simple and user-friendly way.

A new mileage-based tax for EVs from April 2028 

The biggest change is the introduction of a mileage-based tax for electric vehicles from April 2028: 

• Battery electric cars will pay 3p per mile.  

• Plug-in hybrids will pay 1.5p per mile. 

• The amount will rise each year with inflation. 

For a typical driver covering around 8,500 miles a year, this adds up to roughly £255 a year. 

Even with this change, EV drivers will still pay around half the amount that petrol and diesel drivers pay in fuel duty for the same mileage. 

Higher VED threshold for EVs from 2026 

From April 2026, the “expensive car supplement” will only apply to vehicles priced over £50,000, rising from the current £40,000 threshold.  

For electric cars, this change can save up to £2,370 in VED over the first five years after registration. 

How EV taxes compare with petrol and diesel cars 

Petrol and diesel drivers still pay fuel duty, which typically works out at around double the new EV mileage tax per mile. EV owners also benefit from: 

• Cheaper energy per mile 

• Lower servicing and maintenance costs 

• Fewer mechanical issues 

• Lower ongoing taxes in most cases 

One point to keep in mind is the difference in VAT on charging: 

• Home charging is taxed at 5% VAT 

• Public charging is taxed at 20% VAT 

This means drivers without off-street parking can face higher day-to-day charging costs. A review of this VAT structure is expected, but no changes were included in the Budget. 

What the Budget means for used electric cars 

The overall direction remains supportive of EV adoption, but some details for the used market are still to be confirmed. 

Here’s what we know: 

• The new mileage-based tax applies to all EVs from April 2028, whether new or used. 

• Public charging VAT remains at 20%, so used-EV buyers who rely on rapid charging should continue comparing tariffs to keep costs down. 

• Electricity-bill changes from 2026 to 2029–30 will affect all EV owners.  

So, are used EVs still good value? 

Yes, absolutely! Used EVs continue to offer very strong value because: 

• Their purchase prices are significantly lower than new EVs 

• Running costs remain low even after 2028 

• Depreciation is already absorbed by the first owner 

• Charging specially at home, still offers exceptional savings 

What this means for drivers right now 

• If you are thinking about your first EV 

  • Running costs remain lower than petrol and diesel. You can find a detailed comparison in this article.  

  • Buying before 2028 lets you avoid the mileage charge for longer 

• If you already own an EV 

  • Nothing changes immediately 

  • The mileage-based tax begins in 2028 

  • Electricity bill adjustments from 2026 may lower home charging costs slightly before returning to normal from 2029 

• If you are comparing EV versus petrol 

  • EVs remain cheaper per mile 

  • Servicing and maintenance costs are lower 

  • The updated VED threshold makes EV ownership even more attractive