Electric Vehicle Excise Duty (eVED) Explained: Official Consultation Guide
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The UK Treasury has published its official consultation on electric Vehicle Excise Duty (eVED)—a distance-based taxation system replacing traditional road tax for electric cars from April 2028. For employees considering salary sacrifice, understanding eVED's practical implications is essential for long-term financial planning.
What is eVED (electric Vehicle Excise Duty)?
Electric Vehicle Excise Duty represents the government's solution to declining fuel duty revenues as the UK transitions towards zero-emission motoring. Unlike the flat-rate Vehicle Excise Duty system introduced in April 2025, eVED charges motorists based on actual miles driven—mirroring how petrol and diesel drivers currently pay fuel duty at the pump.
The consultation document confirms eVED will be "a mileage-based tax on battery electric (EV) and plug-in hybrid (PHEV) cars" integrated into the existing VED system administered by the Driver and Vehicle Licensing Agency (DVLA).
Official eVED Rates Confirmed
HM Treasury has set precise rates for the new tax:
Battery Electric Vehicles (BEVs): 3 pence per mile Plug-in Hybrid Electric Vehicles (PHEVs): 1.5 pence per mile
These rates represent approximately half the fuel duty equivalent paid by petrol and diesel drivers (6 pence per mile). For the average EV driver covering 8,900 miles annually, this translates to £267 per year (£22.25 monthly)—substantially less than the £480 annually paid by typical petrol car owners through fuel duty.
The consultation confirms rates will be "uprated in 2029-30 and in future years in line with CPI inflation, to ensure that the tax maintains its real-terms value."
How eVED Works: Estimation and Payment
The system prioritises simplicity by integrating with familiar VED processes:
Annual Estimation: At VED renewal, motorists estimate their mileage for the year ahead Upfront Payment: Pay the estimated eVED charge alongside VED (monthly, bi-annually, or annually) Year-End Reconciliation: Submit actual mileage, triggering automatic balancing payment or credit
Example Calculation
Estimated annual mileage: 10,000 miles Rate: 3p per mile Annual eVED: £300 Monthly payment option: £25
This approach "helps motorists smooth payments over the year and reduce the likelihood of large balancing payments," according to the consultation document.
Mileage Verification System
The government has designed eVED to avoid GPS tracking whilst ensuring compliance:
For Cars Over Three Years Old: Mileage recorded at annual MOT tests—no additional requirements for most motorists
For Cars Under Three Years Old: Additional mileage checks required around first and second registration anniversaries at accredited providers (typically MOT garages), funded by the government at no charge
The consultation confirms: "There will be no requirement to report where and when miles are driven or install trackers in cars." This privacy-first approach addresses concerns about government surveillance whilst maintaining system integrity.
Who Pays eVED?
The consultation defines scope comprehensively:
In Scope:
All UK-registered battery electric cars
All UK-registered plug-in hybrid electric cars
Vehicles receiving VED exemptions for disability benefits (exempt from VED but not eVED, as they're not exempt from fuel duty)
Out of Scope (April 2028 launch):
Electric vans, buses, coaches, motorcycles, and HGVs
Hydrogen fuel cell vehicles (under review)
Standard hybrid vehicles (using petrol/diesel as sole external power source)
For fleet and leasing businesses, the consultation acknowledges "special arrangements" will be developed to "minimise the administrative burdens."
The £3.6bn Support Package
Alongside eVED, the government announced substantial support measures:
£1.3bn Extended Electric Car Grant - Discounts up to £3,750 on eligible vehicles through 2029-30
£200m Public Charging Infrastructure - Expanding home, workplace, and public charging networks
Expensive Car Supplement Increase - Threshold rises from £40,000 to £50,000 from April 2026, saving qualifying Tesla, BMW, and Mercedes EV drivers £410 annually
BiK Rate Protection - 3% Benefit-in-Kind rate confirmed until April 2030
eVED vs Current VED: Understanding the Transition
The consultation clarifies the relationship between existing VED and new eVED:
| Tax Type | Current (2025-26) | From April 2028 |
|---|---|---|
| VED First Year | £10 | £10 (continues) |
| VED Standard Annual | £190 | £200 (confirmed) |
| eVED (8,500 miles) | N/A | £255 |
| Total Annual Cost | £200 | £455 |
| Petrol Equivalent | ~£895 | ~£895 |
Even with eVED, electric vehicles maintain substantial cost advantages over combustion engines.
Salary Sacrifice: How eVED Impacts Your Savings
For employees using The Electric Car Scheme, eVED represents a manageable addition to an already cost-effective package.
Real-World Example: Volkswagen ID.4
Monthly salary sacrifice cost: £425 Annual eVED (10,000 miles): £300 (£25/month) Annual VED: £200 (£16.67/month) Total monthly motoring tax: £41.67
Equivalent Petrol SUV: Monthly finance: £465 Annual fuel duty equivalent: £600 Annual VED: £220 Total monthly motoring tax: £68.33
Net electric advantage: £320 annually, even including eVED
The consultation confirms salary sacrifice schemes remain "protected until 2030," with Complete Employer Protection safeguarding both businesses and employees.
Responding to the Consultation
The government seeks input on sixteen specific questions covering:
Mileage estimation guidance requirements
Technology solutions for simplified reporting
MOT garage preparedness and alternative checking approaches
Fleet and leasing industry administrative arrangements
Compliance frameworks and penalty regimes
Life event flexibility considerations
The consultation runs until 23:59 on 18 March 2026, with responses submitted via SmartSurvey.
Why eVED Doesn't Diminish EV Value
Despite introducing distance-based taxation, electric vehicles remain substantially cheaper to run than petrol alternatives:
eVED rates at 50% of petrol fuel duty equivalent
Lower maintenance costs (approximately 50% reduction)
ULEZ exemptions and parking discounts
Access to The Charge Scheme (20-50% savings on charging costs)
The consultation emphasises the government "remains firmly committed to supporting the transition to electric vehicles" with eVED designed to ensure this "happens fairly and will also protect vital motoring taxation revenues for the long term."
Planning for April 2028
Ordering Now:
Benefit from no eVED for entire 2-4 year lease term
Lock in protected 3% BiK rate
Access £3.6bn support package immediately
Current Lease Holders:
Most leases end before or shortly after April 2028
Factor eVED into next vehicle decision with certainty
High-Mileage Drivers: Even at 20,000 miles annually (£600 eVED), combined with salary sacrifice savings of 20-50%, electric vehicles deliver exceptional value compared to petrol equivalents paying approximately £1,200 in fuel duty.
Take Action on eVED
The official consultation provides unprecedented clarity on how electric Vehicle Excise Duty will function from 2028. With precise rates, integrated payment systems, privacy-protected verification, and substantial government support, the framework ensures electric vehicles remain the most economical choice for UK drivers.
For employees: Use our savings calculator to model eVED alongside salary sacrifice benefits and see total cost advantages.
For employers: Book a demo to discover how The Electric Car Scheme provides comprehensive employee benefits whilst contributing to corporate sustainability goals.
Electric Vehicle Excise Duty represents fair contribution to infrastructure funding whilst maintaining substantial incentives for zero-emission motoring—and with salary sacrifice schemes delivering 20-50% savings, there has never been a clearer financial case for switching to electric.
Use our eVED calculator to find out how much you will pay.
Frequently Asked Questions: eVED (Electric Vehicle Excise Duty)
What is eVED?
eVED (electric Vehicle Excise Duty) is a mileage-based tax on battery electric and plug-in hybrid cars starting from April 2028. It charges 3 pence per mile for fully electric vehicles and 1.5 pence per mile for plug-in hybrids, replacing the fuel duty that petrol and diesel drivers pay at the pump.
When does eVED start in the UK?
eVED begins on 1 April 2028. The government consultation runs until 18 March 2026, allowing motorists and businesses to provide feedback on implementation details before the system launches.
How much will eVED cost me?
For an average electric vehicle driver covering 8,500 miles annually, eVED costs approximately £255 per year (£21.25 monthly). This is calculated at 3 pence per mile for battery electric vehicles or 1.5 pence per mile for plug-in hybrids.
Is eVED the same as road tax?
No. eVED is separate from but integrated with Vehicle Excise Duty (road tax). From April 2028, electric car owners will pay both the standard VED rate (currently £190 annually) plus eVED based on miles driven. Learn more about current VED rates for electric cars.
How do I pay eVED?
You estimate your annual mileage at VED renewal, pay the estimated eVED charge alongside your VED (monthly, bi-annually, or annually), then submit actual mileage at year-end for reconciliation. Payment integrates with existing DVLA systems through the same channels used for VED.
Do I need a tracker in my car for eVED?
No. The government consultation confirms "there will be no requirement to report where and when miles are driven or install trackers in cars." The system uses user-reported mileage verified at MOT tests to protect motorists' privacy.
How is eVED mileage checked?
For cars over three years old, mileage is recorded at annual MOT tests with no additional steps required. Cars under three years old need additional mileage checks around their first and second anniversaries at accredited providers (typically MOT garages) at no cost to motorists.
Will eVED apply to electric vans?
No. Electric vans, buses, coaches, motorcycles, and HGVs are out of scope when eVED launches in April 2028. The consultation confirms only battery electric and plug-in hybrid cars will be charged initially.
Do disabled drivers pay eVED?
Yes. Drivers receiving VED exemptions through disability benefits (Disability Living Allowance or Personal Independence Payment) must pay eVED, as they are not exempt from fuel duty. VED exemptions continue as normal.
What happens if I drive more miles than I estimated?
DVLA will calculate a balancing payment at year-end. You can either make a single payment or adjust the following year's payments to spread the liability. The government is developing guidance to help motorists estimate accurately.
What if I drive less than I estimated?
You receive a credit carried forward to offset against next year's eVED liability. DVLA is developing automated systems for managing credits and refunds, detailed in the consultation document.
How does eVED work with salary sacrifice?
Electric car salary sacrifice schemes through The Electric Car Scheme deliver 20-50% savings that substantially exceed eVED costs. The 3% Benefit-in-Kind rate remains protected until 2030, maintaining exceptional value even with eVED added from 2028.
Will eVED rates increase?
Yes. Rates will be uprated annually from 2029-30 in line with CPI inflation to maintain real-terms value. The initial 3p per mile rate for electric vehicles and 1.5p per mile for plug-in hybrids applies from April 2028.
What is the eVED rate for plug-in hybrids?
Plug-in hybrids pay 1.5 pence per mile—half the rate for fully electric vehicles. This recognises that PHEVs continue paying fuel duty on petrol-powered miles whilst also using electric charging.
Does eVED apply to miles driven abroad?
Yes. The consultation confirms UK-registered vehicles pay eVED on all recorded mileage, including miles driven overseas, as with current fuel duty. This prioritises privacy and simplicity over complex border-tracking systems.
What happens to eVED when I sell my car?
Pre-paid mileage (credit or deficit) stays with the vehicle and transfers to the new owner. DVLA will make the eVED status visible online, and the government expects this to be reflected in the vehicle's sale price.
How does eVED work if I lease my car?
For leased vehicles, the lessor (leasing company) remains the registered keeper responsible for VED and eVED payments. The consultation acknowledges leasing companies will develop arrangements for drivers to pay accrued mileage liability, with special provisions being developed for fleet and leasing businesses.
Can I use vehicle telematics for eVED reporting?
The government will not mandate telematics use but welcomes views on optional technology solutions. Any future technology-based reporting would be opt-in only to protect privacy, with user-reported mileage remaining the standard approach.
What are the penalties for not paying eVED?
DVLA will align eVED enforcement with existing VED frameworks, including reminder letters, scaled penalties, court prosecutions, and vehicle impounding. The consultation seeks input on designing fair penalties that prevent user error and fraud.
Is odometer tampering illegal for eVED?
Yes. Vehicle owners must ensure odometers function correctly and report mileage accurately. Odometer tampering is already a criminal offence when selling vehicles, and the government is strengthening enforcement measures specifically for eVED compliance.
What support is available alongside eVED introduction?
The government announced a £3.6bn support package including £1.3bn for extended Electric Car Grants, £200m for charging infrastructure, increased Expensive Car Supplement threshold to £50,000 (saving £410 annually), and protected 3% BiK rates until 2030.
How does eVED compare to petrol car fuel duty?
The average petrol driver pays approximately £480 annually in fuel duty at 6 pence per mile. Electric vehicle drivers will pay £255 annually for equivalent mileage (8,500 miles) at 3 pence per mile—approximately half the rate.
Will eVED replace Vehicle Excise Duty?
No. eVED operates alongside VED, not as a replacement. From April 2028, electric car owners pay both standard VED (£190 annually from 2025) plus mileage-based eVED, integrated into a single payment process.
Can I respond to the eVED consultation?
Yes. The consultation is open until 23:59 on 18 March 2026. Responses are submitted via the official SmartSurvey portal, with the government seeking views on 16 specific aspects of eVED design and implementation.
How do I calculate my potential eVED cost?
Use our EV savings calculator to model eVED alongside salary sacrifice benefits and compare total costs against petrol alternatives, including tax, charging, and maintenance.
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Last updated: 03/12/2025
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