A new pay-per-mile charge for electric vehicles (EVs) and some hybrid cars was announced in the Budget.

All new cars will have to be electric or plug-in hybrid from 2030, when a ban on the sale of new petrol and diesel cars comes into force.

From April 2028, electric car drivers will pay a road charge of 3p per mile, while plug-in hybrid drivers will pay 1.5p per mile. The rates will increase with inflation each year.

The government had previously said it wanted a “fairer system for all drivers”, pointing out that there was no equivalent of the fuel duty for petrol and diesel cars.

An electric car driver clocking up 8,500 miles a year is expected to pay about £255. That would be about half the cost per mile that petrol and diesel drivers pay in fuel tax.

The measure is expected to raise £1.1bn in the 2028-29 financial year, rising to £1.9bn by 2030-31.

The tax will apply to all UK-registered EVs and plug-in hybrids, with mileage checked annually, typically during an MOT.

The charge will be added to the existing Vehicle Excise Duty system. A consultation to help introduce the scheme is under way.

Other changes have already been put in place.

On 1 April 2025, Vehicle Excise Duty became payable on EVs for the first time.

For new cars, the payment in the first year is £10, rising to the standard rate of £195 in the second year. Those registered between April 2017 and March 2025 pay £195 from the start.

Electric cars registered on or after 1 April 2025 and costing more than £40,000 were subject to the “luxury car tax” of £425 per year. In April 2026 the price threshold will increase to £50,000.

In London, drivers of electric vehicles will have to pay the congestion charge from 2026.

The move is part of UK government efforts to meet a legally binding aim of achieving “net zero” by 2050. That means not emitting more greenhouse gases than are removed from the atmosphere.

Domestic transport – including cars, buses and trains – was responsible for more than a quarter of emissions in 2023, making it the largest emitting sector.

Ministers have committed to banning the sale of new petrol and diesel cars in 2030.

That means all new cars will have to be electric, or hybrid – with both an internal combustion engine and electric motor.

UK drivers will be able to buy new hybrids until 2035.

The EU won’t ban sales of new fossil fuel-powered cars until 2035.

UK sales of new fully electric cars have been growing steadily.

The number registered rose from 29,800 in October 2024 to 36,800 in October 2025, car industry trade association the SMMT said.

The figure was equivalent to a quarter of new car registrations. The goal is to increase this to 80% by 2030.

In October, 73% of new electric cars were bought by businesses or for fleets, with 27% registered to private buyers.

Meanwhile, the second hand market is growing, but from a low base. SMMT data shows that about 80,600 used electric cars were purchased between July and September. That’s 4% of second hand sales.

Analysis by Zapmap, an electric charger mapper and data provider, suggests that there are now at least 1.7 million fully electric cars on UK roads, about 5 per cent of the total.

Cars with combustion engines still make up the vast majority of cars and people will still be able to drive them after 2035.

In July, the government introduced the Electric Car Grant scheme, with grants of up to £3,750 for eligible models priced at £37,000 or below.

The scheme was launched with an initial fund of £650m. An extra £1.3bn of funding was announced in the Budget.

Transport Secretary Heidi Alexander told BBC News that subsidising EV sales would support economic growth.

“This is an investment in the country’s future… and the good quality manufacturing jobs associated with that,” she said.

Motoring organisation the AA has said drivers “frequently tell us that the upfront costs of new EVs are a stumbling block to making the switch to electric”.

For second hand cars, online marketplace Autotrader says it’s “seeing plenty of examples where electric cars are the same price or lower than similar petrol models, specifically in the three to five-year age group”.

In addition, about 680,800 electric cars are now being leased, the British Vehicle and Leasing Association (BVRLA) said. That’s nearly half of all leases.

When it comes to running costs, electric charging can be cheaper than petrol or diesel. But it depends where you charge.

Charging at home – for those who have the option – is significantly cheaper, especially on an off-peak tariff.

Home charging qualifies for the 5% rate of VAT on domestic energy, compared to the standard rate of 20% for public charging.

Prices can vary a lot when using public charge points, depending on factors including the speed of the charger and the time of day. Certain apps offer discounted charging rates.

The fastest, “Ultra-rapid” charging on the public network may even work out as more expensive per mile than fossil fuels.

Motoring groups say electric cars are generally cheaper to maintain.

The range of electric cars has improved, as has the number of public charge points. But concerns remain about having enough of them around the country.

Data from Zapmap shows almost 87,000 across the UK, in about 44,000 locations. Those include places like supermarket car parks and lamppost chargers.

The chancellor said the government would invest a further £200m for speeding up the rollout of charge points.

In March, a report by the Public Accounts Committee of MPs said availability on motorways was still “patchy”.

It said the government was on track to reach the minimum 300,000 points needed by 2030. However, it added that “too few have been installed outside of the South East and London, which currently host 43% of all charge points”.

According to government data, more than 28,000 home charging sockets have been installed since April 2022 under the Electric Vehicle Chargepoint Grant scheme, while almost 14,000 public on-street chargers have been fitted across the UK since 2017.