A row of electric cars parked on a street, with charging leads trailing over the pavements to the lamposts.

Consultation response: Introduction of Electric Vehicle Excise Duty (eVED)

17 March, 2026

Following the announcement at the Budget that a new electric Vehicle Excise Duty (eVED) will be introduced from April 2028, the government published a consultation seeking views on the design and scope of the measure for electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs). The consultation also explored how the eVED collection process could impact car fleets and leasing businesses, and how the administration burden could be minimised.

eVED is intended to address the long-term decline in fuel duty revenues as the transition to EVs accelerates. Under the proposal, EV drivers would be charged 3p per mile travelled, while PHEV drivers would be charged 1.5p per mile travelled.

The key themes arising in the ATT's response include: 

  • Recognition of the need to replace declining fuel duty revenues. However, we do not believe that the proposed eVED, in its current form, represents a sustainable long-term solution. A broader reform, such as a mileage-based charge applying to all vehicle types, would better support revenue stability. 
  • Concern that applying eVED only to EVs and PHEVs risks it being perceived as a additional tax on EV drivers. This could reduce consumer confidence, reinforce negative perceptions EV affordability, and ultimately slow EV uptake, undermining Net Zero objectives.
  • Evidence from other jurisdictions suggests that EV-specific mileage charges can reduce demand. The UK should carefully consider these impacts to avoid unintended consequences for the transition to electric vehicles.
  • The proposed flat per-mile rate does not reflect differences in vehicle efficiency, weight, or usage. This weakens incentives for more efficient vehicles. 
  • Introducing eVED before addressing challenges with charging infrastructure, particularly cost and accessibility for those without off-street parking, risks placing an unfair burden on some EV drivers.
  • Several practical and fairness concerns need further consideration, including the treatment of overseas mileage, the interaction with employment taxes, assumptions around PHEV usage, and the risk of double taxation or unfair outcomes when vehicles are sold or transferred.
  • The proposed system introduces significant administrative complexity for motorists, fleet operators, leasing businesses, and MOT centres. The Government should carefully consider whether the compliance burden is proportionate to the expected revenue.
  • There is a role for the exploration of technology to simplify reporting and compliance, such as optional automated mileage reporting or use of apps. However, we believe such solutions must remain voluntary.

Overall, while we understand the policy objective, we urge the Government to reconsider the design and scope of eVED to ensure that it is fair, proportionate, and aligned with long-term policy objectives, without adding unnecessary complexity.