EV pay-per-mile road tax from 2028: offsetting the cost with salary sacrifice charging

From April 2028, electric and plug-in hybrid vehicles in the UK will be brought into a new mileage-based charge, on top of standard Vehicle Excise Duty, as part of the government's response to falling fuel duty revenue. It is a significant change for EV drivers, many of whom chose electric partly on the promise of lower running costs. This article covers what is changing and how a salary sacrifice charging benefit can help offset the impact.

What is actually changing

EVs have benefited from very low or zero Vehicle Excise Duty for years, one of several incentives used to encourage adoption. As the vehicle parc has electrified, that has started to erode fuel duty income, which the Treasury has traditionally collected per litre at the pump. The announced mileage-based charge for EVs and plug-in hybrids from 2028 is designed to start closing that gap, charging drivers per mile rather than per litre.

The detail of rates and administration is still being worked through, but the direction is clear: as EV numbers grow, EVs will contribute more directly to road funding than they do today, and the flat "EVs are cheap to tax" assumption will need revisiting.

Why this matters for salary sacrifice EV schemes

Employers running EV salary sacrifice schemes have generally sold the benefit on total running cost, not just the lease saving. The mileage charge does not remove the salary sacrifice tax advantage on the vehicle itself, but it does add a new ongoing cost that employees will notice, particularly higher mileage drivers such as those doing regular commutes or business travel.

That makes it more important, not less, to make sure every other running cost is optimised. Charging is the largest recurring cost after the lease payment, and it is the one most employers have left completely unmanaged.

How salary sacrifice charging offsets the difference

The Charge Scheme lets employees pay for their charging, at home, at work, or across the 76,000+ public chargepoint network via the app and charge card, through a gross salary deduction. Depending on tax band, that is a saving of 20 to 50% versus paying for the same electricity out of taxed income.

For a driver covering 12,000 miles a year, that saving can run from roughly £150 to £400 annually depending on how much charging happens on the public network versus at home. That is a meaningful offset against a new per-mile charge, delivered through a mechanism that already exists rather than a new tax break that needs lobbying for.

Cost pressure from 2028	Offset available today
New mileage-based charge on EVs	Salary sacrifice saving of 20 to 50% on charging costs
Higher effective cost per mile	Lower cost per kWh through gross pay deduction
No change to lease tax treatment	Charging bolt-on to existing salary sacrifice scheme

What employers should do now

Fleet and HR teams do not need to wait for the 2028 detail to firm up before acting. The charging cost saving is available now, regardless of what the final mileage charge structure looks like:

• Add a charging benefit to any existing EV salary sacrifice or company car scheme, without changing lease provider
• Make sure business mileage reimbursement is handled correctly and separately, which is what our Reimburse product covers
• Keep employees informed that running costs, not just tax treatment, are being actively managed

More detail on how the scheme fits alongside fleet policy is on the fleet and procurement page.

Next steps

To see what a charging benefit would be worth to your employees ahead of the 2028 changes, use the savings calculator or book a demo to talk it through.