Policy paper

Electric Vehicle Excise Duty (eVED)

Published 13 July 2026

Who is likely to be affected 

Registered keepers of cars that are electric (battery electric vehicles — BEV), plug-in hybrid (or plug-in hybrid electric vehicle — PHEV), or hydrogen-powered (or hydrogen fuel cell vehicle — HFCEV).

General description of the measure 

This measure implements Electric Vehicle Excise Duty (eVED) as an extension of the current Vehicle Excise Duty (VED) regime.  

From 1 April 2028, eVED a new mileage-based charge will apply to BEVs, PHEVs, and HFCEVs that are cars. The rates of tax will be:

• 3 pence per mile for BEVs and HFCEVs
• 1.5 pence per mile for PHEVs

The rate will be uprated in 2029 to 2030, and in future years, in line with Consumer Prices Inflation (CPI), to ensure that the tax maintains its real-terms value. 

For the purposes of renewing their eVED alongside their VED and to calculate how much eVED to pay, drivers will:

• provide an odometer (mileage) reading from their car
• estimate their mileage for the forthcoming tax period (typically a year)

VED is administered by Driver and Vehicle Licensing Agency (DVLA). They will also administer eVED. 

Motorists will pay an upfront charge based on their estimate or spread their payment across the year, with the year-end mileage reading triggering a reconciliation. Mileage data from cars is currently collected at annual MOTs and is available to view for most cars on GOV.UK. 

Where applicable, the government intends to use this data to ensure that user-supplied mileage is consistent and up to date. This means if a car is already subject to an MOT, there will typically be no additional steps for checks.

Policy objective 

All vehicles contribute to congestion and wear and tear on the roads, but drivers of petrol and diesel vehicles pay fuel duty at the pump to contribute their fair share. However, drivers of electric vehicles do not currently pay an equivalent.

As more people choose to switch to cleaner, greener electric cars, the Office for Budget Responsibility (OBR) has forecast fuel duty receipts will decline. eVED is intended to help replace lost fuel duty revenue from cars over the long term so, like fuel duty, the amount motorists pay will vary based on the amount they drive. 

Background to measure 

The government announced eVED at Budget 2025 and published a consultation on its implementation which closed on 18th March 2026. The government published a response to the consultation on 13 July 2026.

Detailed proposal 

Operative date 

This change will have effect from 1 April 2028.

Current law  

This measure amends the existing legislation for Vehicle Excise Duty (VED) contained in the Vehicle Excise and Registration Act 1994 (‘VERA 1994’).

Proposed revisions 

Primary legislation will be introduced, amending VERA 1994 to apply eVED to all UK-registered electric vehicles and PHEV cars from April 2028. 

The new rates will be set in Schedule 1 to VERA 1994.

There are some further amendments to Part II of the Road Traffic Act 1988 and Part 3 of the Road Traffic (Northern Ireland) Order 1995 which will set out requirements relating to odometers which are necessary for the introduction of eVED. The provisions will also contain powers for the Secretary of State for Transport to make regulations that will be required in due course to bring eVED into operation.

Summary of impacts 

Exchequer impact (£ million) 

2025 to 2026	2026 to 2027	2027 to 2028	2028 to 2029	2029 to 2030	2030 to 2031
-5	-10	-15	+1,100	+1,435	+1,865

These figures are set out in Table 4.1 of the Budget 2025 document and have been certified by the Office for Budget Responsibility. More details can be found in the policy costings document published alongside Budget 2025.

Macroeconomic impact 

This measure is not expected to have any significant macroeconomic impacts  

Impact on individuals, households and families 

This measure is expected to impact around 5.6 million vehicles in the financial year 2028 to 2029. Motorists will need to pay eVED when they first renew their VED after April 2028.  

This measure is expected to impact individuals’ experience of dealing with DVLA as they will need to:

• provide an odometer (mileage) reading for their vehicle
• estimate their mileage for the forthcoming tax period (typically a year) to calculate how much eVED to pay

User-supplied mileage reporting and payments for eVED will be integrated into existing VED processes, to make complying with the new requirements as simple as possible for motorists. 

This measure is not expected to impact on family formation, stability or breakdown.

Equalities impacts 

This measure will apply to individuals regardless of their protected characteristics. HM Treasury does not currently hold data on the protected characteristics of individuals impacted by this measure and so cannot assess if there are any disproportionate impacts to protected groups.

Administrative impact on business including civil society organisations 

This measure is expected to have a negligible overall impact on administrative costs for businesses and civil society organisations which own BEVs or PHEVs. For some businesses, particularly large fleets, the impact will be material. 

One-off costs for businesses are expected to include updating processes to estimate mileage for their vehicles and pay eVED. We also expect there will be ongoing costs for businesses including putting in place new systems to estimate and pay eVED. 

This measure is not expected to disproportionately impact civil society organisations.  

This measure is expected to impact business’ experience of dealing with Driver and Vehicle Licensing Agency (DVLA) as they will need to provide an odometer (mileage) reading from their car, and will estimate their mileage for the forthcoming tax period (typically a year) to calculate how much eVED to pay. 

User-supplied mileage reporting and payments for eVED will be integrated into existing VED processes, to make complying with the new requirements as simple as possible for motorists. The government intends to put in place a set of special arrangements that leasing and rental business will be able to access, including the ability to estimate mileage their vehicles centrally.

The government will continue to engage with leasing and rental businesses in the lead up to the introduction in April 2028 of eVED to work through how these special arrangements will be implemented.

Operational impact (£ million) (HMRC or other)

There will be a financial impact on operational costs for the DVLA and Driver Vehicles Standard Agency (DVSA) associated with administering eVED.  

Other impacts 

A Justice Impact assessment is underway. Overall impacts are anticipated to be minimal.

Environmental impacts  

eVED was introduced alongside a broader package of measures designed to support the transition to zero emission vehicles (ZEV).  

In its November 2025 Economic and Fiscal Outlook, the Office for Budget Responsibility (OBR) assessed that the combined impact of eVED and related Budget measures would reduce EV sales by around 120,000 between financial years 2025 to 2026 and 2030 to 2031. This represents only 2% of total anticipated EV sales during that period. 

Overall, there are significant uncertainties around the environmental impact of eVED because this depends on how the introduction of eVED impacts on drivers’ choices. Compared to the baseline, modelling suggests that some existing car owners could be expected to keep their petrol and diesel vehicles longer, which in turn could lead to higher greenhouse gas emissions over time. Motorists could also choose slightly smaller electric vehicles to offset the overall cost.

Monitoring and evaluation 

This measure will be monitored through the DVLA vehicle licensing data, as well as through regular communication with relevant stakeholders across government and in industry. 

Further advice 

If you have any questions about this change, contact HM Treasury.