Millions of drivers across the UK are set to be slapped with a “double tax” after Rachel Reeves introduced new tax rules for motorists in the Budget.
Owners of plug-in hybrid vehicles will face two taxes in the coming years after the Chancellor unveiled the Government’s new financial plans last week.
The biggest change for drivers was the introduction of pay-per-mile car taxes for electric vehicle and plug-in hybrid owners, which will begin charging from 2028.
Electric car owners will pay three pence per mile, while drivers of plug-in hybrid cars will face a 1.5p levy every time they drive under the new Electric Vehicle Excise Duty (eVED) rules.
Experts have warned that plug-in hybrid drivers will have to pay a double tax in the form of eVED for distance driven by battery power and fuel duty used to power the combustion engine.
Although the Chancellor froze the rate of fuel duty until September 2026, there is a chance that tax will increase in the lead-up to the 2028 introduction of the pay-per-mile charges.
This could see owners of these vehicles pay hundreds of pounds in additional charges, especially if they frequently travel long distances.
So far this year, more than 190,000 new plug-in hybrids have been registered in the UK, according to the latest data from the Society of Motor Manufacturers and Traders.
Millions of drivers could be slapped with a ‘double tax’ within years
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This is an impressive 37.1 per cent growth in sales compared to the same time last year, while retaining 11 per cent of the overall market.
Hybrid models have seen an eight per cent growth in sales to almost 242,000 registrations, while 386,244 new electric vehicles have been sold in 2025.
Many are choosing to switch to plug-in hybrid vehicles as they are seen as a stepping stone before investing in an electric car.
While electric cars are quickly becoming one of the most common options for new vehicles, many still have concerns about the adoption of zero emission vehicles.
Mike Hawes, chief executive of the SMMT, described the incoming double tax as “punitive” and warned that it would put drivers off from investing in plug-in hybrids, which could also have a negative impact on the perception of EVs.
He said: “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,” The Times reported.
Mr Hawes said drivers being taxed twice for eVED and fuel duty would hamper the uptake of cleaner vehicles, especially ahead of the 2030 ban on the sale of new petrol and diesel cars.
To deal with the impact of the pay-per-mile car tax changes, Chancellor Rachel Reeves pledged a further £1.5billion to incentivise drivers to switch to cleaner vehicles.
Around £1.3billion will be given to the Electric Car Grant, taking the total to almost £2billion, while a further £200million will be diverted to the installation of new EV chargers.
The Electric Car Grant has more than 40 eligible models included for the grants, which can help drivers save either £1,500 or £3,750 for vehicles priced at £37,000 or less.
Experts have praised the additional funding for EV charging, with hopes that 100,000 chargers could be installed around the UK over the coming months.