The UK government has reaffirmed its commitment to taxing electric vehicle (EV) owners based on mileage driven, with a new electric vehicle excise duty (eVED) scheme set to begin in April 2028. Under the plan, EV owners will pay 3 pence per mile, while plug-in hybrid (PHEV) owners will pay 1.5 pence per mile. The Treasury stated this measure is necessary to ensure EV and PHEV drivers contribute equitably to public finances as fuel duty revenues decline.
The Treasury published its response to a public consultation on the eVED scheme, which received over 5,000 responses. A significant development from the consultation is the confirmation that vehicles can be tracked using GPS technology on an opt-in basis to calculate annual payments. This voluntary system will utilize a vehicle's built-in connectivity features to transmit mileage data via 4G or 5G networks, offering a simpler alternative to manual estimates.
Additionally, the mileage rates will be adjusted annually in line with the Consumer Prices Index (CPI) inflation starting from 2029-30. This contrasts with the 15-year freeze on fuel duty for petrol and diesel vehicles, which has also included a temporary 5p-per-litre cut since 2022.
Changes and Criticisms
Two key changes emerged from the consultation. Firstly, the requirement for mileage checks at MOT testing centers for newer EVs and PHEVs (under three years old) has been removed. Instead, owners will provide estimates or opt for connected systems. Secondly, the scheme now allows for bulk mileage estimates to be filed for fleets by business users, finance providers, and leasing companies, aiming to reduce administrative burdens.
Despite these adjustments, critics argue the policy could hinder EV adoption and undermine net-zero ambitions. Concerns raised during the consultation included the accuracy of mileage estimations, the burden on MOT centers, and the potential for motorists to be charged for driving overseas. The British Vehicle Rental and Leasing Association noted that while the mechanics of the tax may have improved, the timing is still problematic, suggesting that making EVs more expensive to own is counterproductive.
Mileage Fraud Concerns
A significant concern revolves around the potential for mileage fraud, commonly known as vehicle clocking. The eVED system relies heavily on odometer readings from MOT tests, leaving it vulnerable. The availability of devices that prevent mileage recording, known as mileage blockers, has increased. While sellers often claim these are for off-road use, investigations have found them marketed as undetectable. These devices can interfere with electronic control systems, making discrepancies difficult to detect during MOTs or servicing. Vehicle history companies estimate that around 2.3% of UK vehicles show signs of mileage manipulation.
The government plans to introduce legal requirements for functioning odometers, create offenses for tampering, and prohibit the supply of manipulation devices. Powers will also be given to authorities to examine vehicles suspected of odometer fraud. However, the Treasury acknowledges these powers may not be used frequently, relying on cross-referencing with MOT records and algorithms to identify suspicious patterns. Critics suggest this approach may underestimate the sophistication of current vehicle-clocking technology.
Other Issues
Further concerns include eVED liabilities being attached to vehicles rather than drivers, with mileage credits transferring upon sale. There is also no initial mechanism for refunds on vehicles declared off the road via a Statutory Off Road Notification (SORN). The government has ruled out differentiated rates for high-mileage drivers or reduced charges for rural residents. Mileage accumulated abroad will count towards liabilities, meaning UK drivers could be taxed for driving in other countries, a measure defended by the Treasury as necessary to avoid more intrusive monitoring.
Experts warn that the pay-per-mile system could become politically challenging, especially given the DVLA's legacy IT systems' inability to process simple automatic refunds when cars are sold or scrapped. This has led to questions about the deliverability of the policy.