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The government intends to introduce Electric Vehicle Excise Duty (eVED), a new mileage-based charge for electric and plug-in hybrid cars.
eVED will apply to battery electric vehicles (BEVs), plug-in hybrid electric vehicles (PHEVs) and hydrogen fuel cell electric vehicles (HFCEVs). The rates of tax will be 3 pence per mile for BEVs and HFCEVs and 1.5 pence per mile for PHEVs. The rate will be uprated in 2029/30, and in future years, in line with the Consumer Prices Index (CPI).
The government aims to introduce a mileage estimation tool and an opt-in system called "eVED Connect" making use of the vehicles' built-in connectivity to report mileage automatically and potentially support mileage estimations for the coming year. The government has plans to develop an automated refunds model to make refunds easier and available in circumstances when a motorist overestimates their mileage or sells their car.
Owners and drivers of BEVs, PHEVs and HFCEVs, as well as businesses using such cars and manufacturers of such cars who will need to incorporate the "eVED Connect" system into their products.
The government will implement eVED from 1 April 2028. The mileage estimation tool to support motorists will be available at launch in April 2028. The automated refunds model is intended to be developed by 2030.
BEV, PHEV and HFCEVs drivers may be concerned about higher running costs, especially those travelling longer distances. Businesses who operate fleets of BEV, PHEV and HFCEVs may also be concerned about costs. Conversely, the introduction of an automatic mileage estimation tool may be welcomed as a simpler alternative to the current manual method, although drivers may have privacy concerns about the planned connected mileage reporting tool.