The Labour Party government has confirmed that the forthcoming pay-per-mile car tax for electric vehicles, known as the eVED scheme, will not remain at its initial rate of 3p per mile for long. The rate will be subject to annual increases in line with the Consumer Price Index (CPI) starting from the 2029-30 financial year, according to the government's consultation response.
Details of the eVED scheme
Chancellor Rachel Reeves announced the pay-per-mile tax at the Autumn Budget, and it has now been approved ahead of her anticipated replacement by new Labour Party Prime Minister Andy Burnham. The scheme, set to begin in 2028, will impose a charge of 3p per mile for electric vehicles and 1.5p per mile for plug-in hybrids. For a driver covering 8,000 miles annually, this equates to a £240 charge.
The Treasury stated: "The UK is undergoing a significant transition to zero-emission vehicles. While drivers of petrol and diesel vehicles contribute to the public finances through fuel duty based on how much they drive, electric vehicle users do not currently pay an equivalent usage-based tax. As the number of electric vehicles on UK roads increases, the government is committed to ensuring that the motoring tax system remains sustainable in the long term and that all motorists make a fair contribution for their road use."
Industry and motorist reactions
Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT), expressed concerns to Auto Express: "We recognise the need for a new approach to motoring taxes, however, the absence of full consultation on eVED has created some confusion in the market. It remains the wrong measure at the wrong time with the OBR [Office for Budget Responsibility] expecting 440,000 fewer BEVs to be sold as a result."
The AA’s president, Edmund King, also commented: "Drivers will naturally have questions about such a scheme, which is why the AA will lead the charge for a fair and transparent system that is easy to understand. We will also need protections for certain groups, such as carers who use their car for work and rural drivers who are more car-dependent."
Future adjustments and impact
The government clarified in its consultation response that "the rate will be uprated in 2029-30 and in future years in line with CPI inflation." This means the initial 3p rate will rise annually, potentially increasing the financial burden on electric vehicle owners over time. The scheme aims to ensure that as more drivers switch to electric vehicles, they contribute to road maintenance and other motoring-related public finances, similar to fuel duty paid by petrol and diesel drivers.
