Budget 2025: Pay-per-mile EV road tax confirmed to include PHEVs

Forecasts predict new 3p-per-mile tax will cut EV demand by 400,000 sales

The government’s new pay-per-mile tax on EVs is confirmed to include plug-in hybrid cars.
The news was revealed within documents released in error by the OBR ahead of today’s budget.
It also forecast the the new tax will cut EV sales by 440,000 between now to March 2031.
The new tax is being brough in as part of an effort to claw back lost revenue from the duty imposed on petrol and diesel, as motorists transition away from ICE vehicles.
The levy is set at 3p per mile driven in an EV and 1.5p for a plug-in hybrid. This will come into effect from April 2028.
The OBR forecasts the Treasury will raise £1.1 billion in the 2028-29 tax year, raising to £1.9bn by 2030-31.
However, “the new charge is likely to reduce demand for electric cars as it increases their lifetime cost” explained the OBR.
This will be offset, however, by 130,000 of increased sales as a result of the Electric Car Grant – the new EV incentive an