The government has confirmed that from April 2028, electric cars will face a 3p-per-mile charge, and plug-in hybrids will pay 1.5p per mile. What was framed as a “fairness measure” has instead landed like a hammer across the motor trade.
Manufacturers aren’t happy. Dealer groups aren’t happy. Consumer groups aren’t happy.
And judging by early polling, drivers certainly aren’t.
For an industry trying to stabilise EV demand after years of peaks and troughs, this new tax arrives at exactly the wrong time.
Here’s why it matters, and what it means for dealers and brokers who’ll have to explain it to customers.
From 2028, EV owners will pay:
For a typical 8,000-mile driver, that’s:
The total EV tax for many will fall between £315 and £435 per year.
On paper, that’s still cheaper than the fuel duty petrol and diesel drivers pay.
But perception is everything, and the industry is saying this sends the wrong message at the wrong time.
2024–25 was the first real period where EV sales began to settle:
Dealers describe the new tax as “throwing cold water over a warming market”.
Instead of simplifying the EV message, the government has added another cost for sales teams to untangle.
PHEVs already face stricter emissions tests, higher BIK steps, and scepticism over real-world efficiency.
The industry reaction to the 1.5p-per-mile rate has been blunt:
“Unhelpful.”
“Punitive.”
“Makes no sense when we’re trying to nudge people into lower-emission cars.”
For many buyers who use a PHEV correctly (short, frequent trips on electric, motorway with petrol), the tax feels disconnected from how they drive.
EV value improves with mileage because the running costs drop sharply compared to petrol.
The new system does the opposite; it charges them more.
Taxi fleets, last-mile delivery, and high-use commuter buyers are the most vocal groups pushing back.
Dealership teams are already juggling:
Now they need to explain another cost line that varies per customer.
In an industry where simplicity sells, complexity kills conversions.
Expect these three questions on repeat:
Analysts expect the tax to shave 20k–30k EV sales per year from future forecasts.
This isn’t a collapse, more of a stumble.
They sit between worlds:
Expect some customers to shift back toward efficient petrol or hybrid options.
The more complicated EV ownership becomes, the more buyers lean back to what they know.
This is especially true for 3-6-year-old petrol and diesel cars, which remain the easiest to explain, fund and maintain.
When tax is confusing, the business that explains it best wins the trust.
Good use-cases still exist:
EVs aren’t the wrong answer. They’re just no longer the automatic answer.
PCP GFVs for EVs will need regular review. Uncertainty always hits future values first.
Hybrids and ICE stock should benefit, especially in the 3–5-year age bracket.
We don’t fund EVs directly today, but the EV market still shapes the whole used-car landscape, including the petrol, diesel and hybrid cars we do finance.
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