UK announces further details of its electric vehicle road user charging proposal (eVED)

I wrote in December 2025 about the proposals from the UK Government for what it is called eVED or Electric Vehicle Excise Duty.

The UK will be following Iceland and New Zealand, as the first two countries to mandate distance-based road user charging for EVs and PHEVs, and Oregon, Utah, Virginia, Hawaii and Vermont all of which have introduced opt-in distance based charges (with the option of an annual fixed fee).  

In order to avoid confusion in terminology, what is meant by Vehicle Excise Duty in the UK is broadly equivalent to annual vehicle registration or licensing fees in most other jurisdictions. This are broadly fixed fees for a duration (one year or smaller increments), based on a vehicle classification which may be by size, type of vehicle, gross maximum weight, engine size, fuel type or emissions class, or some combination of those.

The eVED proposal is for a fee based on distance travelled to apply to BEVs and PHEVs.

The UK Government has now published its response (PDF) to consultation on the proposal.

The details of the proposal have been updated on the UK Government website here.

In short:

• On 1 April 2028, light BEVs, PHEVs and hydrogen-fuel cell cars will be subject to eVED. It only applies to "light passenger vehicles" so not light commercial vehicles.
• The charge will be £0.03/mile (US$0.025/km) for BEVs and hydrogen-fuel cell vehicles and £0.015/mile (US$0.0126) for PHEVs. 
• Charges will be increased in 2029 and 2030 in line with the Consumer Price Index.
• Drivers will be required to provide an odometer reading when they re-register their car for VED from that date, and to estimate mileage for the YEAR ahead.
• Drivers can choose to pay for the entire estimate upfront in advance, or in instalments spread through the year.  Reconciliation of the correct amount will happen at annual VED time.
• It is expected to generate £1.1b (US$1.48b) in revenue in the first full year, increasing to $1.435b the subsequent year and £1.865b in the year after that.
• The effect on EV sales is expected to be a 2% reduction over a five year period.

So the fee will not apply to any other BEVs or PHEVs.

Several other important elements include:

• Net revenues will be treated as general tax revenue. It will not be hypothecated for road spending or transport spending.  This reflects fuel duty, but does not reflect practice in any other jurisdiction, which generally sees it hypothecated for road spending or to support further vehicle electrification.
• No provision has been made to require that there be a location-specific option for measuring distance available for vehicle owners who want it. This means that such vehicles located in Northern Ireland which cross the Irish border, will be subject to the fee for any distance driven in the Republic of Ireland. Likewise, driving such a vehicle outside the UK will see the fee charged at the same rate. Officials may say it is the same case with fuel duty, except that fuel duty isn't paid infinitely on travel outside the UK. At some point the vehicle will need refueled, and would be subject to fuel duty in the country of purchase.  If the Republic of Ireland or say France introduced a similar fee, imposed on visiting vehicles, then it would mean UK registered vehicles are double taxed.
• The fee only applies to UK registered vehicles, so visiting BEVs. PHEVs and hydrogen fuel cell cars will pay nothing.
• Verification of odometer readings only occurs when safety inspections are undertaken ("MoTs") , which only needs to happen after a vehicle is three years old. This raises the real risk of vehicle owners facing a very high initial EVED bill if their estimate of miles for the previous three years has been low. This is particularly the case if it has changed ownership, as the incentive will be for the owner for the first two and a half or so years to estimate a very low mileage and pay (and lie about mileage when renewing VED), and to sell the car, with the subsequent owner receiving the first MoT and the verified odometer reading being much higher.  This might be resolved if change of ownership includes records of reported mileage to be compared to actual mileage on sale.

The proposal continues to upset the EV retail lobby which sees it as risking EV sales overall, but it is a fairly simple plan, and it does only partially recover revenue that would otherwise have been collected from fuel duty if the cars were petrol or diesel powered.

Nevertheless, assuming it proceeds it means the UK will be introducing a road user charge from July 2028 which is distance based, largely as a partial revenue replacement for fuel duty.  This will follow Vermont in January 2027 and New South Wales in July 2027.

We will await to see if the imminent change in British Prime Minister, and Chancellor of the Exchequer will see these plans change, once again. However, given the experience of multiple other jurisdictions, it appears the UK has gone for an excessively simplistic approach, when it should have been more bold. 

What should the UK do?

1. Allow odometer self-reporting via app, to spread out payments:  The average car in the UK is driven around 7,200 miles per annum.  That means £216 a year if charged 3p a mile. It should be possible for those who want to spread that out up to four times a year to do so, if they submit odometer readings (either through an app or to an independent third party).  Iceland bills motorists (in fact all vehicle owners for all vehicles) monthly, with an estimate which can be corrected through submission of an actual reading.  This added flexibility will better suit some users, and avoid the pressure of a higher annual fee.
2. Allow the market to enable third parties to provide distance measurement and account management services, including the option to exclude distance off public roads including outside the UK: Complaints about driving to Ireland or France are valid, so the option to avoid paying for distance in other countries should be available, although not government led. Likewise, some people in rural areas may want to avoid paying for distance travelled on private properties. Some Treasury officials will insist this is fair because fuel duty is consumed for such trips, but if the UK is not interested in moving more towards user pays in road charging then it is missing out on an opportunity for more efficient and fairer pricing.
3. Hypothecate the revenue and subject increases to regulatory review: Treating it like just another tax prevents there being more flexible charges and pricing in future, and also undermines its potential acceptability. If net revenues were used to help pay for road maintenance, then the rates they are set at can be based on the cost of providing that infrastructure allocated proportionately to those vehicles. This becomes the embryo of a national road user charging system for all vehicles that recovers infrastructure costs much more fairly and efficiently than the status quo. Not doing this leave it as just another tax, and provides no link between what is paid and what service is delivered.