Measure
The government has announced the introduction of Electric Vehicle Excise Duty (“eVED”) to be charged at an initial rate of 3 pence per mile for battery electric cars and at 1.5 pence per mile for plug-in hybrid cars, increasing annually with CPI. eVED will be paid alongside and in addition to existing Vehicle Excise Duty payments, based on the estimated mileage each year and subject to a true-up based on actual mileage.
The measure has been introduced alongside a broader package of measures relating to electric vehicles, including an increase to £50,000 of the threshold at which electric vehicles are subject to the Vehicle Excise Duty Expensive Car Supplement, as well as other non-tax measures.
A consultation on this measure has been published and is open until 18 March 2026.
Manufacturers, sellers and drivers of electric vehicles.
1 April 2028, with a consultation open until 18 March 2026.
Whilst the government is committed to increasing the use of electric vehicles as part of its efforts to tackle climate change, their consultation on eVED seeks to address the reduction in Vehicle Excise Duty and Fuel Duty receipts arising from the transition.
The government estimates that the eVED rate of 3 pence per mile represents half the fuel duty rate paid by the average non-electric vehicle driver, though the OBR expects a behavioural impact to result in reduced adoption of electric vehicles.
The OBR estimates that eVED will raise £1.1 billion in 2028/29, rising to £1.9 billion in 2030, subject to the behavioural impact on the uptake of electric vehicles, and partially offset additional government spending arising from the broader electric vehicle package.