When the Toyota Prius plug-in hybrid went on sale in 2012, its rechargeable battery pack and gasoline engine combination was hailed as the best of both worlds.
Instead of recharging an electric motor on its own through regenerative braking like previous hybrid models, plug-in hybrid (PHEV) owners can now plug their car into a three-pin socket and get a longer electric range – with the added assurance of a petrol engine backup. It could save you money, reduce anxiety, and be good for the environment.
But PHEVs are on track to become the nation’s least desirable car. From 2028, those who bought plug-in hybrids for their green credentials will become the highest-taxed drivers.
They will be hit with an “illogical” charge of 1.5p per mile as part of the government’s new road charging initiative. In addition to mileage taxes, they will continue to pay fuel taxes at the pumps, effectively being taxed twice for every mile they drive.
Electric vehicles (EVs) will attract a higher rate of 3p per mile, but as drivers do not pay fuel tax, the principle of a pay-per-mile charge has been tacitly accepted. Meanwhile, plug-in hybrids are unaffected by the new per-mile tax and will continue to pay the normal fuel tax.
Car dealers believe fed-up PHEV owners will rush to sell as demand inevitably declines until 2028, when pay-per-mile is introduced.
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Geoffrey Troughton, who owns a Ford Kuga PHEV, said: “Who will want to buy a plug-in hybrid when you can avoid the tax with another car?” he asked. “I will be charged simply because my car has a plug while plug-in hybrids don’t. It’s an illogical and ridiculous charge.”
Speaking in the Commons, Heidi Alexander, the transport secretary, said: “Equity remains at the heart of this Budget and, as the Chancellor rightly said, ‘everyone has to play their part’, so electric and plug-in hybrid vehicles will start paying a new Electric Vehicle Excise Duty (VED).
What he failed to point out, however, was that hybrid drivers are already contributing.
Every time they fill up at the pumps, they pay 52.95 per liter of fuel – a charge that equates to about 6 to 7 per mile. Throw VAT into the mix – levied on the cost of fuel (20pc) and electrical charging (20pc for public charging, 5pc for home) – and it easily amounts to a triple charge.
Plug-in hybrids usually have a limited range in their battery, so it’s common for drivers to ignore their car’s electric capacity. The average electric range of a PHEV is 15 to 60 miles. This is dwarfed by the capabilities of pure electric vehicles, which can achieve more than 300 miles on a single charge, according to tests by consumer group Which?.
The PHEV’s poor battery range means many owners don’t bother to charge their car or use the electric function. However, they will still be charged 1.5p for every mile they travel.
David Sillito, who drives a Lexus plug-in hybrid and lives in central Scotland, said: “If I drive to Manchester and back one weekend, then Newcastle and back the next to see my kids, I’ll do just under 1,000 miles. But around 900 of those would be on [fuel] motor so i pay 1.5 pa miles for 900 miles i already paid fuel tax for.
“I find it absolutely unfair and unjust.”
The government won’t differentiate between battery or motor hybrid mileage: if you own a PHEV, you’ll have to pay 1.5p per mile regardless.
The government said that while it “recognizes that PHEV driving habits vary and that some drivers will drive more or less than 50pc in electric mode”, having drivers report their petrol versus electric mileage would be too impractical.
“A reduced rate for PHEVs strikes the right balance between fairness, protecting driver privacy and minimizing administrative burdens on drivers,” Treasury said.
Mr Sillito is “scratching now” as he considers his next car purchase ahead of the introduction of pay-per-mile in 2028 – a conundrum that industry leaders fear will push PHEV owners back to petrol or diesel cars.
Philip Nothard, of consultancy Cox Automotive Europe, said: “The timing of this announcement seems particularly inappropriate. This could have been communicated once the details were finalized – there is a clear risk that this policy will dampen demand.”
Fed-up drivers on social media have vowed to ditch hybrids in favor of naturally aspirated engines. It is the opposite of what the Government wants people to do. Rosemary Banks wrote on social media platform X: “I have a plug-in hybrid that costs me £651 a year in VED. Now I’ll have to pay another 1.5p per mile, like I’m getting a really good deal at £651 a year! Time for a diesel.”
The days of the hybrid car were already numbered before Rachel Reeves announced the pay-per-mile bombshell. But their demise is likely to accelerate now.
Manufacturers – who can sell hybrids in the UK until 2035 – may well speed up their plans to phase them out of production.
The Office for Budget Responsibility has predicted that the per-mile tax will reduce electric vehicle sales by 440,000 over the next five years. No figures have been released predicting the impact it will have on plug-in hybrids, but dealers expect it to be high.
“I think they’re just going to disappear,” said Umesh Samani of the Independent Automobile Dealers Association. “There will be excess, with more plug-ins for sale as owners look to get rid of them. That will mean lower prices, which will not help current owners.”
Another quirk of the tax is that it will be applied even for miles traveled outside the country. Kuga driver Mr Troughton, an accountant based in Northern Ireland, will be stung for his mileage on foreign roads in the Republic of Ireland.
Geoffrey Troughton says the Chancellor has destroyed any motivation to buy a plug-in hybrid – Charles McQuillan
The Treasury admitted this could be a problem, but said the number of people driving abroad each year was “a small proportion” and would therefore not grant mileage allowances to foreigners.
Mr Troughton said: “If I take the car to Dublin, I’m driving in the Republic of Ireland and paying the British Chancellor for the pleasure.
“When I bought my engine in July, the first thing I did was take it to France, but they charged me for that too. Every element of this doesn’t seem right.”
He added that electric charging in Northern Ireland is more expensive than on the mainland.
“Locally we have BP pulse chargers and they are 89p per kilowatt hour. I get about 33 miles from a 14.4 kilowatt battery. I get about 38p per electric mile, whereas if I fill it up with fuel in Tesco I get 50 miles to the gallon, which is about 1 mile,”1.
“So it’s just uneconomical to plug the car in anyway. But now, despite not driving it electric, I’ll be charged an extra 1.5p just because it comes with a plug.”
Currently, PHEVs account for one in 10 new cars sold, according to the Society of Motor Vehicle Manufacturers and Traders.
So far this year, 208,000 have been bought – a 34% increase on 2024. The healthy figures are supported by commercial buyers as companies are drawn to PHEVs due to their generous benefit-in-kind tax rates, but new emissions standards will erode the tax benefits from 2028.
Ginny Buckley of EV advice site Electrifying.com believes plug-in hybrids only make financial sense for drivers who can charge regularly at home or work at the cheapest rates and rarely dip into the fuel tank. “If you can do that, it’s probably better to go all-electric anyway, with lower overall running costs,” she said.
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