Pay-Per-Mile Confirmed: What the eVED Response Means for Salary Sacrifice Drivers
The wait for detail is over. On 13 July 2026 the government published its response to the eVED consultation, confirming it will press ahead with a pay-per-mile charge on electric cars from April 2028. It is one of the biggest changes to motoring tax since the switch to electric began, and it has understandably prompted questions from drivers already on, or thinking about joining, an electric car salary sacrifice scheme.
The short version: the headline design is now confirmed, the government has softened several of the rougher edges that worried drivers and businesses, and the fundamental case for going electric through salary sacrifice is unchanged. This article explains what was confirmed, what changed after the consultation, and exactly what it means for the money you save. For the full technical breakdown of how eVED is estimated, paid and reconciled, our eVED consultation guide remains the deep-dive reference.
What the government confirmed
Electric Vehicle Excise Duty is a mileage-based tax on battery electric and plug-in hybrid cars. It exists because fuel duty revenue falls every time a driver swaps petrol or diesel for electric, and the Treasury wants to protect that revenue as the country electrifies. Rather than charging at the pump, eVED charges on distance driven.
The government consulted on the design between 26 November 2025 and 18 March 2026 and received more than 5,000 responses. The response document confirms the core design that was first set out at the 2025 Budget:
The charge applies from April 2028. Pure electric cars pay 3p per mile and plug-in hybrids pay 1.5p per mile, rates set at around half the fuel duty an equivalent petrol driver pays. eVED sits alongside Vehicle Excise Duty rather than replacing it, so electric car drivers will continue to pay the standard flat VED rate (£195 in 2025/26) and add eVED on top. Electric vans are exempt, as are buses, coaches, motorcycles and HGVs at launch. The Treasury expects the tax to raise around £1.2bn a year, and rates will be uprated from 2029-30 in line with CPI inflation to hold their real-terms value.
Crucially for anyone worried about surveillance, the government has ruled out GPS tracking. The system relies on odometer readings alone. There is no charge based on where or when you drive, no nationwide road-pricing scheme, and no connected device installed in your car. You submit an annual mileage figure when you renew your vehicle tax, and that is the extent of the extra admin for most drivers.
The rates: what you will actually pay
The numbers matter more than the noise, so here is what eVED looks like in practice. The Electric Car Scheme's standard lease allowance is 10,000 miles a year, which is a useful benchmark for most drivers.
| Annual mileage | eVED at 3p/mile (electric) | eVED at 1.5p/mile (plug-in hybrid) |
|---|---|---|
| 6,000 miles | £180 (£15/month) | £90 |
| 8,000 miles | £240 (£20/month) | £120 |
| 10,000 miles | £300 (£25/month) | £150 |
| 15,000 miles | £450 (£37.50/month) | £225 |
At the standard 10,000-mile allowance, a pure electric driver pays £300 a year, or £25 a month, from April 2028. That is real money, but it needs to be seen next to what a comparable petrol driver pays. Fuel duty currently works out at roughly 6p per mile, so the same 10,000 miles costs a petrol driver around £600 a year in duty alone, before you add the VAT charged on top of every litre.
| Annual cost at 10,000 miles | Electric car (from April 2028) | Petrol equivalent |
|---|---|---|
| Mileage-based tax | £300 eVED (3p/mile) | ~£600 fuel duty (6p/mile) |
| Standard VED | £195 | £195 |
| Total motoring tax | £495 | ~£795 |
Even after eVED lands, the electric car pays roughly half the mileage tax of its petrol counterpart, and that comparison excludes the far lower cost of charging versus filling up, cheaper servicing, and the clean-air zone and congestion advantages many EV drivers still enjoy. The Charge Scheme adds to that gap, letting drivers save 20-50% on charging costs through salary sacrifice at home, at work and in public.
What changed after the consultation
The consultation drew heavy feedback on two themes: unnecessary bureaucracy and the risk of choking off EV demand at exactly the moment sales targets ramp up. The government listened on several points.
The most significant change concerns newer cars. The original proposal would have required vehicles under three years old, which do not yet need an annual MOT, to undergo additional mileage checks to keep eVED accurate. The government has now confirmed it will not proceed with that requirement. For salary sacrifice drivers in particular, this matters, because scheme cars are almost always brand new and would have been the ones caught by that extra step. That friction is gone.
The second big change is for fleets and leasing companies. The consultation flagged just how poorly a tax designed around a single private motorist fits a business managing thousands of vehicles. In response, the government has significantly simplified the arrangements: leasing companies and fleets will be able to use estimated mileage readings, benefit from bulk licensing arrangements, and use more flexible payment options. This is directly relevant to salary sacrifice, because your scheme car is leased and the leasing company is the registered keeper responsible for VED and eVED. Simpler fleet rules mean a smoother experience passed through to you as the driver.
Taken together, the government says these refinements make eVED "fair, proportionate and sustainable" while cutting unnecessary administration. What has not changed is the launch date, the rates, or the decision to introduce the tax at all.
eVED and salary sacrifice: what it means for your savings
This is the question that matters most for anyone on, or considering, the scheme. The honest answer is that eVED is a modest, predictable cost that sits a long way below the savings salary sacrifice delivers.
Salary sacrifice works by taking your car payment from gross salary, before income tax and National Insurance are deducted. In exchange you pay Benefit-in-Kind on the car, and for pure electric cars BiK is just 4% for the 2026/27 tax year. That combination is why the scheme delivers 20-50% off the all-in cost of running an EV, with the biggest savings for higher and additional-rate taxpayers. BiK rises by only one percentage point to 5% in 2027/28 and stays far below the rates applied to petrol and diesel company cars.
Now put eVED next to that. On a typical scheme package, a basic-rate taxpayer might save 20% and a higher-rate taxpayer considerably more, worth hundreds of pounds every month on a mid-range electric car. eVED at the standard 10,000-mile allowance costs £25 a month from April 2028. In other words, the tax the headlines are worried about is a fraction of what the scheme already saves you, and it does not begin for nearly two years.
There is also a timing point worth understanding. Salary sacrifice cars are typically leased for two to four years. A car ordered today will run its entire term before, or only just into, the April 2028 start date, which means many current drivers will pay no eVED at all on their present car and can factor the charge into their next one with full certainty over the rates. Ordering now effectively locks in eVED-free motoring for the length of the lease.
What it means for fleets, employers and leasing
Because every salary sacrifice car is a leased vehicle, employers and their drivers benefit from the fleet simplifications directly. The registered keeper, usually the leasing company, handles the mechanics of estimating mileage, paying eVED and reconciling it, using the new bulk and estimated-reading arrangements. For HR and finance teams, that means eVED should not add meaningful administrative load to running a scheme.
The Electric Car Scheme's Complete Employer Protection already shields businesses and employees from the risks that usually make salary sacrifice feel complicated, covering resignation, redundancy, long-term sick leave and parental leave from day one with no exclusion periods. eVED does not change that protection or the fundamentals of how a scheme is run. It is simply one more running cost, and a predictable one, folded into the total cost of ownership that electric still wins on.
How the industry responded
Reaction to the response was mixed, and it is worth hearing both sides.
The BVRLA, the trade body for the vehicle rental and leasing sector, welcomed the changes while keeping up its criticism of the timing. Its chief executive Toby Poston said the government had "taken some of the roughest edges off" the plans and had accepted that "a tax designed around private motorists won't work for the fleets that are driving the UK's transition to electric vehicles." He added, though, that "you can't create a smooth switch to electric vehicles by making them more expensive to own," warning that the mechanics had improved but the timing was still wrong. During the consultation the BVRLA had estimated the tax as originally proposed would have cost the fleet sector around £260m a year in compliance alone.
EVA England, which represents drivers, struck a more cautious note. Chief executive Vicky Edmonds called the change for newer EVs welcome but said the wider scheme "remains too complex, risks leaving people out of pocket and fails to give drivers the confidence they need," arguing ministers should be making the system simpler and fairer rather than pressing ahead.
The Energy and Climate Intelligence Unit put the cost in perspective. Its head of transport Colin Walker said eVED "will not stop EVs remaining significantly cheaper to run than petrol cars, delivering savings of over £1,000 a year," while cautioning that any weakening of EV sales targets would do more harm to drivers than the mileage charge itself.
The common thread is that no serious voice expects eVED to reverse the running-cost advantage of electric. The debate is about complexity and timing, not about whether EVs remain the cheaper choice.
What salary sacrifice drivers should do now
For most drivers the practical steps are straightforward. If you already have a scheme car, there is nothing to do differently today. eVED does not start until April 2028, and depending on when your lease ends you may never pay it on your current vehicle. When you do renew, you will submit an annual mileage figure alongside your vehicle tax, and the leasing company handles the rest.
If you are weighing up a scheme car, the maths has barely moved. A car ordered now runs eVED-free for most or all of its term, keeps the 4% BiK rate for 2026/27, and continues to save you 20-50% against the true cost of running an equivalent petrol car. High-mileage drivers should note that even at 15,000 miles a year, eVED of £450 is comfortably outweighed by salary sacrifice savings and by the lower cost of charging versus fuel.
The single best way to see the real numbers for your situation is to model them. Our savings calculator shows what a specific car costs on salary sacrifice for your tax band, and our dedicated pay-per-mile tax calculator shows exactly what eVED would add. If a brand-new car is more than you need, a used electric car on salary sacrifice brings the same tax treatment at a lower monthly cost.
Frequently asked questions
When does eVED start?
April 2028. The rates and design are now confirmed, though further legislation and detailed guidance will follow before then.
How much is eVED?
3p per mile for pure electric cars and 1.5p per mile for plug-in hybrids. At the standard 10,000-mile allowance that is £300 a year, or £25 a month, for a pure electric car.
Does eVED replace road tax?
No. eVED is charged in addition to Vehicle Excise Duty. From April 2028 electric car drivers pay the standard flat VED rate and eVED on top, through a single integrated process.
Will there be a tracker in my car?
No. The government has ruled out GPS tracking, journey-based charging and connected devices. eVED relies solely on an annual odometer reading submitted when you renew your vehicle tax.
Do salary sacrifice drivers pay eVED?
Yes, from April 2028, but the leasing company as registered keeper manages the mechanics using the new simplified fleet arrangements. The cost is small relative to the 20-50% you save through the scheme, and a car ordered now may run its whole term before eVED begins.
Are electric vans affected?
No. Electric vans are exempt, along with buses, coaches, motorcycles and HGVs when eVED launches.
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Last updated: 14/07/2026
Our pricing is based on data collected from The Electric Car Scheme quote tool. All final pricing is inclusive of VAT. All prices above are based on the following lease terms; 10,000 miles pa, 36 months, and are inclusive of Maintenance and Breakdown Cover. The Electric Car Scheme's terms and conditions apply. All deals are subject to credit approval and availability. All deals are subject to excess mileage and damage charges. Prices are calculated based on the following tax saving assumptions; England & Wales, 40% tax rate. The above prices were calculated using a flat payment profile. The Electric Car Scheme Limited provides services for the administration of your salary sacrifice employee benefits. The Electric Car Scheme Holdings Limited is a member of the BVRLA (10608), is authorised and regulated by the FCA under FRN 968270, is an Appointed Representative of Marshall Management Services Ltd under FRN 667174, and is a credit broker and not a lender or insurance provider.
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