DETAILS RELEASED: Government eyes mileage tax for drivers of electric cars and taxis from 2028 under proposed eVED scheme
- Perry Richardson
- 1 hour ago
- 3 min read
Motorists and taxi drivers using electric vehicles are set to face a new direct usage charge from April 2028 under government proposals to introduce Electric Vehicle Excise Duty, a mileage-based tax designed to replace falling fuel duty revenues as the UK transitions away from petrol and diesel.
Under the consultation published by HM Treasury, fully electric car drivers would pay 3 pence per mile driven, with plug-in hybrid drivers charged a reduced rate of 1.5 pence per mile. The scheme would sit alongside existing Vehicle Excise Duty and be administered by the Driver and Vehicle Licensing Agency, with payments made annually or monthly as part of the existing VED process.
For drivers, including those operating electric taxis and private hire vehicles registered as cars, the proposed cost is positioned as materially lower than current fuel duty. The Government estimates an EV driver covering 8,000 miles a year would pay around £240 annually in eVED, compared with around £480 in fuel duty for an equivalent petrol or diesel driver. Rates would be uprated in line with CPI inflation from 2029 to maintain real-terms value.
The consultation argues the change is necessary to address what it describes as a growing imbalance in motoring taxation. As more drivers switch to electric vehicles, fuel duty receipts are forecast to fall from around £24bn in 2024-25 to approximately £12bn a year by the 2030s, a decline the government says would otherwise require spending cuts or tax rises elsewhere.
Government consultation sets out 3p per mile tax for EVs from 2028, with implications for private motorists, fleets and taxi drivers
Writing in the ministerial foreword, Exchequer Secretary to the Treasury Dan Tomlinson MP said that without reform, around one in five drivers would be paying no equivalent usage tax by 2030, while others continued to contribute hundreds of pounds a year. He said the proposed system would ensure all drivers contribute to road upkeep while preserving incentives to switch to electric vehicles.
Operationally, drivers would be required to estimate their annual mileage when renewing VED, pay eVED based on that estimate, and then reconcile the figure at the end of the year using an odometer reading. Mileage data already collected at MOT tests would be used for checks, with additional government-funded mileage checks proposed for vehicles under three years old that are not yet subject to MOT requirements.
The scheme explicitly rules out location-based road pricing or mandatory vehicle trackers, with ministers citing privacy concerns. Mileage driven overseas would still count towards eVED, mirroring the current treatment of fuel duty, which does not vary by location of driving.
While vans, buses, coaches, motorcycles and HGVs are excluded at launch, the proposals apply to all UK-registered electric and plug-in hybrid cars, including those owned by fleets and leasing companies. The government acknowledges that fleets, leasing firms and sectors such as taxi and private hire will face additional administrative complexity and says it is considering bulk and streamlined arrangements similar to existing VED systems.
Alongside the new charge, the Government has reiterated support measures aimed at softening the impact on EV uptake. These include extending the Electric Car Grant to 2029-30, raising the threshold for the VED Expensive Car Supplement on EVs to £50,000, and additional funding for public and workplace charging infrastructure. Ministers say much of the early eVED revenue would be recycled into EV support and road maintenance, including pothole repair funding for local authorities.
The consultation, which runs until 18 March 2026, seeks views on the detailed design, enforcement and compliance framework for eVED. A formal government response is expected later in 2026, with legislation anticipated ahead of the planned April 2028 start date.
