Share your Views – EV Mileage Rates
The Chancellor set out plans in the 2025 Budget to introduce a mileage levy on owners of electric and plug-in hybrid electric cars (PHEV), by charging a 3p per mile for drivers of electric cars and rate of 1.5p per mile for PHEVs.
Whilst drivers of petrol and diesel cars pay tax on how much they drive through fuel duty at the pump, drivers of electric vehicles currently make no equivalent contribution and Government is concerned that this creates an imbalance in motoring taxation in that electric car drivers are not subject to any fuel duty tax.
For the first time in 2025, Vehicle Exercise Duty (VED) was applied to electric and Plug in hybrid vehicles, but the proposed new eVED, is seeking to strike a balance between existing motoring taxes for fuel duty and charges for electric vehicles. The charges are expected to be introduced from 1 April 2028 and will be administered by the Driver and Vehicle Licensing Agency (DVLA).
How will it work?
Drivers will be required to self-declare mileage through an integrated VED process which will allow for the reporting and payment for eVED through an integrated system that will utilise existing VED processes, in an attempt to make complying with the new requirements as simple as possible for motorists.
Alongside paying the VED each year, eVED motorists will estimate their mileage for the year ahead, pay an upfront charge based on their estimate or spread their payment across the year, and then submit their actual mileage at the end of the year to trigger a reconciliation. Motorists will have their mileage checked annually typically during their MOT as is already the case, or for new cars, around their first and second registration anniversary.
For new cars, as with VED, dealerships will have the option to prepay and bundle eVED mileage into the on-road price of a car. Alternatively, the vehicle owner will be able to make their own arrangements and estimate their mileage for the remainder of the tax period, for eVED purposes. For existing cars, at VED renewal each year, motorists will be prompted to enter their vehicle’s mileage reading and then estimate their mileage for the year ahead. Based on this estimate, an estimated annual eVED liability will be calculated by DVLA, using the applicable rate.
Payment Options
Motorists can choose between multiple payment options; they can either pay upfront or split into smaller monthly payments via Direct Debit and this will be paid alongside their VED.
At the end of the VED period, a user supplied mileage reading will be reconciled against the estimate provided at the start of the VED period and DVLA systems will calculate a balancing payment.
The government will publish guidance to help motorists to estimate their mileage, and will explain how adjustments will be made at the end of the VED period.
Responses can be provided online to: https://www.smartsurvey.co.uk/s/eVEDconsultation/
This consultation will close at 23:59 on 18 March 2026.