Industry News

Electric Vehicle Excise Duty (eVED) Consultation: What UK Operators need to know.

25th February 2026

In late 2025, HM Treasury opened a consultation on a major change to how electric cars and plug-in hybrid vehicles contribute to road tax in the UK.

The Government has launched a consultation on a major change to how electric cars and plug-in hybrid vehicles contribute to road tax in the UK. The consultation is open until 18 March 2026 and sets out proposed details for a new mileage-based tax, called ‘electric Vehicle Excise Duty’ (eVED), which will be introduced from 1 April 2028.

Why is the UK Government proposing eVED?

Fuel duty generates a large portion of motoring tax revenue used to fund public services like road maintenance. As more drivers switch to electric vehicles (EVs) — which don’t use petrol or diesel — this fuel duty revenue is falling.

Without reform, fuel duty receipts are forecast to fall by around half by the 2030s, creating a large gap in funding for roads and other services. The government’s position is that it’s unfair for electric drivers to contribute nothing equivalent to fuel duty, given that all vehicles cause road wear, congestion and benefit from public infrastructure. eVED is designed to ensure that all motorists contribute in proportion to the distance they drive.

How will this impact the bus and coach industry?

In the short term (to 2028), there is no direct impact on coach or bus operators. However, in the medium-term there could be a new policy direction toward broader road pricing, which should be monitored carefully.

The proposal reinforces the government’s move toward mileage-based road taxation. Passenger transport operators should treat this as an early signal of longer-term structural tax reform, not an isolated measure.

How would eVED work?

Fully electric cars would pay ‘3 pence per mile’ driven
Plug-in hybrid electric vehicles (PHEVs) would pay a ‘reduced* rate of 1.5 pence per mile’ because they still use petrol/diesel for part of their journeys.
The tax would replace some of the revenue lost from fuel duty but still be lower overall — EV drivers would still pay less per mile than petrol/diesel drivers under current arrangements

Instead of creating a totally new system, the mileage collection and payment would be built on top of the existing Vehicle Excise Duty (VED) process managed by the DVLA. Motorists would:

Estimate how much they expect to drive over the coming year.
Pay an upfront charge based on that estimate at the time they renew their VED.
Submit actual mileage at the end of the year to reconcile any difference (bills or credits).

This approach avoids the use of GPS tracking or requiring detailed data on where and when miles are driven — the government says this protects privacy while keeping compliance simple.

What is consultation asking for?

The government wants views on a range of design and implementation questions, including:

Whether the proposed mileage charge and rates (3p and 1.5p) are appropriate
How motorists should estimate their mileage for payment purposes
Whether and how technology (e.g., vehicle telematics) could be used — on an optional basis — to simplify reporting
The role of MOT centres and accredited providers in verifying mileage
Ways to minimise administrative burdens, especially for fleets and leasing companies
How the system should handle over- or under-estimations of mileage
Compliance and penalty frameworks for incorrect declarations.

What action operators and vehicle owners take now?

Make sure you take part and share your feelings on eVED. If you own, operate, lease, or run vehicles that would be affected by eVED, here are five key things the Government suggests that you do:

Read and respond to the consultation. The consultation closes on 18 March 2026, so stakeholders should prepare and submit their responses before that date — either individually or via representative bodies. Responses are submitted via an online survey form set up by the government.
Understand your future costs. The introduction of a mileage-based tax means that you may need to budget for mileage charges in addition to existing VED. Leasing companies and fleet operators should start thinking about how drivers and lessees will report annual mileage.
Engage with suppliers and advisors. If you run electric fleets or leasing operations, consider talking to accountants, fleet managers, and leasing partners to understand potential administrative changes.
Prepare systems for mileage reporting. Even though the exact processes are not finalised, fleet managers should start considering:
- How will annual mileage data be collected and stored.
- Whether telematics or internal odometer tracking systems could help streamline compliance.
- What processes will be needed to reconcile estimated and actual mileage for tax purposes.
Keep an eye on policy developments. Since the consultation will shape how eVED is ultimately implemented (and might lead to changes based on feedback), operators should track updates and official responses as they are published later in 2026.

eVED Summary

eVED is a new pay-per-mile tax on EV and PHEV cars from 1 April 2028
It currently only includes cars
The consultation is open until 18 March 2026
All motorists should click here to complete the eVED consultation.

This has not escaped the business and bodies’ attention, including the CTA. They have conducted a survey to gather data and evidence to shape its position on the matter. Click here to complete the survey (open to CTa members) before 2 March: CTA eVED Survey (see link below).