Drivers of certain popular cars could be caught out by Rachel Reeves’ new pay-per-mile car tax policy, with some motorists set to pay twice.
Motorists could be caught out by Reeves’ latest cash grab. (Image: Getty)
Motorists getting behind some of the UK’s most popular vehicles could be charged “double car tax” under Rachel Reeves’ new Budget plan. Owners of Plug-In Hybrid Vehicles (PHEV) will pay 1.5p per mile to use the roads from 2028 under the Chancellor’s new Electric Vehicle Excise Duty (eVED) proposals.
PHEV models are equipped with dual power sources, featuring both a petrol engine and an electric battery. The Chancellor decided to introduce pay-per-mile rates for PHEV owners, but fees will be different from those running fully electric models. Battery electric models with full EV powertrains will pay the higher 3p per mile charge, but there is still concern PHEV owners are effectively paying double tax.
PHEV models have a fuel tank and an electric battery and will be hit with two sets of fees. (Image: Getty)
The pay-per-mile charge was introduced specifically to combat declining fuel duty revenues as motorists switch to EVs. However, the petrol engine fitted to most of these cars means that PHEV owners will still need to pay existing fuel duty rates to run their vehicles.
The 1.5p per mile charge would then be added on top to account for the electric battery component of the powertrain, meaning owners will effectively be paying two tax fees. Mike Hawes, President of the Society of Motor Manufacturers and Traders (SMMT), has described the new fees as “punitive” and warned the move was likely to deter customers from making the transition.
He told The Times: “Some drivers are understandably anxious, especially those with concerns over charging availability or those who regularly do long journeys. For them, plug-in hybrids offer reassurance about the charging experience while cutting emissions. Given these vehicles provide a crucial stepping stone towards a full EV, taxing them twice for fuel and eVED is punitive and will dissuade consumers from investing in this beneficial technology.”
PHEV sales continue to be popular in the UK, with data from the SMMT revealing over 190,000 sales so far in 2025. The latest statistics reveal a whopping 37.1% increase from the 138,775 cars sold at this stage in 2024.
PHEV models and hybrid cars are here to stay, with Labour confirming the vehicles will not fall under the UK’s petrol and diesel car ban from 2030.
The final framework accepted that brand-new hybrid cars can continue to be sold for a bit longer, with manufacturers allowed to produce models until at least 2035.
