The UK government has confirmed the terms of its new Electric Vehicle Excise Duty (eVED) scheme, a pay-per-mile system that will apply to electric cars, plug-in hybrid cars, and hydrogen fuel cell cars from April 2028. Electric cars will pay 3p per mile, while plug-in hybrids will pay 1.5p per mile.
The eVED rate will increase every year in line with the consumer price index. Drivers will be able to prepay their eVED for the year by providing an estimation of their annual mileage.
How the scheme will work
Drivers will be able to make payments for the new eVED scheme annually, bi-annually, or monthly. The government is considering using telematics systems to track mileage and issue automatic bills each month.
However, the use of this technology won’t be mandatory, as protecting motorists’ privacy is a priority for the government. Any potential technology-based solutions will only be optional.
Payments and exemptions
Drivers who are either partially or wholly exempt from traditional VED, such as those who qualify for Motability, will still be subject to the eVED scheme. The government expects eVED to become an additional selling point for electric cars and PHEVs on the second‑hand market.
Like the old tax disc system, any mileage already paid for will remain with the vehicle if it’s sold. This means that buyers of second‑hand electric cars and PHEVs will benefit from any remaining mileage credits.
However, there are some potential issues with the scheme. For example, new cars that are less than three years old are not required to have an annual MOT, which removes a convenient opportunity for the government to check their mileages.
To solve this issue, the government is proposing an extra mileage check at an accredited provider on the car’s first and second birthdays. The terms of how this will work haven’t yet been finalized.
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Border crossings and mileage tracking
The government has ruled out the possibility of separating UK mileage from mileage covered abroad. This means that drivers who regularly cross into other countries, such as those living on the Northern Irish border, may end up paying for mileage they’re not liable for.
For example, a driver who lives on the Northern Irish border and commutes to work in the Republic of Ireland will need to pay for all those miles under the new scheme, even though they’re not contributing to the wear and tear of UK roads.
Despite these potential issues, the government believes that electric car drivers will still benefit from the new scheme. An EV driver covering 8,000 miles per year will pay £240 in eVED.
High mileage drivers are likely to be hit hard by the changes. Covering 20,000 miles in an electric car, for example, will require a payment of £600 in eVED.
In comparison to other countries, the UK’s eVED scheme is relatively straightforward, but its implementation may still pose challenges for drivers who frequently cross borders. The government’s decision to prioritize simplicity over a system of checks to deduct non‑UK mileage may have unintended consequences for these drivers.
The eVED scheme’s impact on the second‑hand market will also be worth watching, as buyers of electric cars and PHEVs may be more likely to consider the remaining mileage credits when making a purchase.
Some drivers may need to adjust their driving habits to minimize their eVED payments.
The eVED scheme will start in April 2028.
