David NicholsonThe UK Chancellor Rachel Reeves has always seemed to be absolutely aligned to oil and gas lobbyists so while there was a collective groan about the prospect of a pay per mile tax on EV’s there was also a feeling of resignation. In the end though the November 2025 budget though also brought some positives in what was essentially a game of snakes and ladders for EV owners. In fact the snakes were not as bad as they could have been and there were also some useful ladders.
Pay per mile tax for EV owners – eVED the snake the media highlighted
Ok so the equivalent of “fuel duty for electric cars” has been revealed although it isn’t due to actually come into operation until April 2028. Set at 3p per mile for fully electric cars the cost is so far pretty reasonable. For example driving 5,000 miles will incur £150 while 10,000 miles is £300.
There are questions to be raised of course. The method of paying will apparently involve visiting an MOT station to validate your mileage. This applies even if your car doesn’t require an MOT. Which begs the question how will the MOT stations be paid for this? By government or the driver?
There is also there question of fairness. While estimates are that fuel duty equates to about 7p per mile, it is also true that if you aren’t charging at home, many public chargers cost about 50% more than petrol at 89p per kWh. At the same time those with driveways and home chargers pay just 7p per kWh to charge. So the Chancellor is tipping the cost balance further away from EV’s without driveways with pay per mile Personally I’d rather pay the same 7p per mile for EV’s as fuel duty but get public charging costs down to 55p per kWh across the country (including a drop in VAT for reasonably priced chargers). There is room for tax if the government could only regulate the electricity and public charging costs with a little competence. So far there is little prospect of useful policy action because simply put. energy and oil and gas company lobbyists wouldn’t like it.
Pay per mile for plugin hybrids – arguably the biggest budget snake
Plugin hybrids are from a CO2 perspective a rather pointless technology at best or at worst a cynical tax scam. In the current UK and European lab tests which are used to set vehicle tax rates for plugin hybrids they cut CO2 by 75%. Do they? Do they *uck! In multiple studies including one involving 800,000 drivers in the real world show they cut emissions by just 19%. As a result they are taxed a fifth of the CO2 they actually emit. It’s a technological and regulatory tax scam.
Now they will be liable for half the per mile rate as an EV or 1.5p per mile. So how can this be worse? Well one of the issues with plugin hybrids is the tax saving is up front but there is no requirement to actually charge the car. A plugin hybrid can usually travel between 13 and 60 electric miles per charge, far less than electric cars. Most owners I know only charge their PHEV once a year if that. So on 8,000 miles a year they are paying fuel duty of around 7p per mile on all but around 40 miles.
So that’s 7,960 miles on petrol at 7p per mile in fuel duty costing £557.20 and 40 miles on electric costing… £120. So thats £677.20 in combined fuel duty and pay per mile charges. That compares with an EV doing 8,000 miles that costs just £240.
Of course you could be one of the small number of PHEV owners who really does plugin every night and runs at least half the time on charged power. Except of course even then many PHEV’s will still burn petrol to heat and cool the cabin or to accelerate hard even when ostensibly in “electric mode”.
Budget Ladder 1 – The Luxury car tax threshold
Also known as the Expensive Car Supplement this is a rather odd UK tax is paid on all cars costing over a threshold (based on list price including extras but ignoring discounts). You pay £425 for 5 years but only 1 year after purchase. So often this tax will be paid but second hand buyers and costs owners an additional £2,125 until year 6.
This tax is paid by more and more cars every year because the threshold was set at £40,000 in…April 2017. In this budget the threshold remained the same for all cars except electric cars which will now have a threshold of £50,000.
For family cars buyers of EV’s like the Skoda Enyaq or Hyundai Ioniq 5’s or most Tesla Model 3’s and Y’s this means even longer range models priced between £40,000 and £49,999 can be bought without paying this expensive tax. In fact for cars that benefit from the change it will outweigh the eventual EV per mile tax for most drivers.
Worth also noting while the pay per mile EV tax starts in 2028, the saving on the expensive car tax has been backdated to electric cars purchased since last April.
Budget Ladder 2 – The Electric car grant gets a boost
The electric car grant has benefited many EV buyers with £1,500 off many models since it was reintroduced in summer 2025. There were concerns the grant might run out of funds but the chancellor topped it up by £1.3 billion and extended the planned duration from 2028 to 2030. This should boost confidence.
At the same time more cars seem to be benefitting from the grant. Under it’s slightly mysterious workings cars with a very local supply chain (usually car and battery built in UK or France) qualify for either the £1,500 grant or the full band 1 £3,750 grant which at the time of writing applies to the:
- Citroen e-C5 Aircross long range
- Ford E-Tourneo Courier
- Ford Puma Gen-E
- Mini Countryman Electric
- Nissan Leaf
- Renault 4
- Renault 5 (comfort range 52kWh)
- Renault Alpine A290
One of the quirks is that in cars like the Renault 5 and Citroen C5 Aircross the smaller battery gets the smaller band 2 grant while the bigger battery longer range version gets the full grant. As a result after the grant is applied a base spec on the C5 costs (at the time of writing) £32,565 with the standard 74kWh battery (320 miles WLTP) while Long range with a 97kWh battery and 421 miles range costs barely any more at £32,935!
Conclusion
Considering whose budget it was. it actually provided slightly bad news for EV buyers, very bad news for hybrid owners but also pockets of good news for buyers of EVs under £50,000 in RRP and those under £40k made in the UK or France. The Renault 4 and 5 and Ford Puma Gen-e are all cracking cars too and the new Nissan Leaf looks promising.
At the end of the day the transition from combustion to electric is happening with or without the budget. In the year to November 2025 petrol sales are down 8.3% while diesel has crashed by 15.8%. Unelectrified combustion sales combined are down to 52.2% of sales for the year to November and just 48.5% for the month of November 2025. By comparison battery electric sales are up 26% while plugin hybrid sales are lower but up 34.8%. Combined sales with a plug at now over a third of sales with other hybrids making up the difference. What would speed things up is effective action on the cost of public charging.
