The UK government has confirmed that a pay-per-mile electric vehicle tax will go ahead in 2028, but with key policy revisions for fleets and drivers, as revealed in
The UK government has confirmed that a pay-per-mile electric vehicle tax will go ahead in 2028, but with key policy revisions for fleets and drivers, as revealed in its official consultation response.
The concessions bring special rules to make compliance easier for fleet, rental, and leasing companies. Initially, the British Vehicle Rental and Leasing Association (BVRLA) warned that core issues from the scheme’s original design would saddle the fleet sector with £260m per year in compliance costs alone.
In a bid to smooth out these operational hurdles, the Government has now announced several key policy revisions.
These changes include abandoning planned annual mileage checks for newer, pre-MOT vehicles, while fleet operators will be permitted to provide estimated mileage readings.
At the same time, companies will be able to make bulk payments and settle outstanding liabilities with top-up payments before defleeting, easing concerns over remarketing.
Officials will also explore using connected car data to track mileage, amid concerns that mandatory tracking devices could violate driver privacy and compromise data security.
Notably, the Government has also stressed that it will maintain an open dialogue with the fleet sector ahead of the 2028 rollout.
The changes follow intense industry backlash over a poorly designed system that experts warned would create severe compliance friction for fleets and could deter drivers from going electric.
The Electric Vehicle Excise Duty (eVED) pay-per-mile tax was originally announced in the 2025 Autumn Budget by Chancellor Rachel Reeves, followed by a 16-week public consultation. The new tax is designed to plug a looming multi-billion-pound financial gap in public finances caused by declining fuel duty revenues as motorists transitioned away from petrol and diesel cars. Fully electric vehicles will be taxed at 3p per mile, and plug-in hybrids (PHEVs) will be taxed at 1.5p per mile. Electric vans will be exempt initially.
But research shows that the upcoming tax is already causing some drivers to reconsider switching to an electric vehicle while other concerns centred around the administrative complexity for motorists, businesses, fleets, leasing companies and MOT garages.
The consultation received more than 5,000 responses from a broad range of stakeholders that included many individuals, alongside contributions from businesses, academics, trade and membership bodies, public sector organisations, charities and other interested parties.
The BVRLA was an active participant in the process. It conducted multiple working groups with members, industry stakeholders and government representatives, and gave evidence to the Transport Select Committee in March, where chief executive Toby Poston labelled eVED as “extremely fleet hostile”.
Speaking following the consultation response, Poston said: “When it comes to the Wrong Tax at the Wrong Time, eVED, the fleet sector has spoken loud and clear. This poorly designed and scheduled tax would pile extra cost and bureaucracy onto fleets and drivers and eviscerate EV demand just as the Government’s sales targets start ratcheting-up.”
Poston said it was great that the Government had “taken some of the roughest edges off its eVED plans”.
“They’ve accepted that a tax designed around private motorists won’t work for the fleets that are driving the UK’s transition to electric vehicles.”
But he warned that the fundamental economic barrier remains.
“There is no avoiding the fact that you can’t create a smooth switch to electric vehicles by making them more expensive to own. The mechanics of the tax may have improved, but the timing is still wrong.”
And Jon Lawes, managing director at Novuna Vehicle Solutions, warned that the revised scheme still introduces an additional cost at a time when the focus should be on making EVs more accessible and affordable.
“Fleets have led the way in driving EV adoption, and maintaining that momentum will be vital if the UK is to meet its net zero ambitions.
“The Government has made progress, but the timing remains a concern. If we want more businesses and motorists to choose electric, policy needs to encourage the transition, not make it more expensive.”
Meanwhile, Vicky Edmonds, chief executive officer of advocacy group EVA England, said the revised policy still does not work for drivers, despite the Government dropping plans for mandatory, physical mileage inspections at local garages for newer EVs.
“The wider scheme remains too complex, risks leaving people out of pocket and fails to give drivers the confidence they need.
“At such a crucial point in the switch to electric, ministers should be making the system simpler, fairer and easier to understand, not pressing ahead with a policy whose key faults remain unresolved. This now piles pressure on the public charging review that must pave the way for affordable charging, or this transition simply won’t work for drivers.”
And Peter Golding, CEO, FleetCheck, said: “We welcome the fact the Government has made a series of concessions on the practicalities of eVED implementation that could potentially make life easier for fleets but it doesn’t change the core objection that the whole idea is probably just too much, too soon when it comes to electrification for both fleet and private buyers. Just at the point in time when electric cars should be starting to feel like the natural choice for buyers, this is unwelcome expense and complication.”
Fleet management company Alphabet GB has urged incoming Prime Minister Andy Burnham to scrap the eVED proposals in favour of a streamlined system built directly into EV charging infrastructure tariffs.
The company warns that the currently proposed plans could severely derail EV adoption across the UK. Furthermore, because the proposed eVED would apply retroactively to all existing EV leases rather than just new contracts, leasing companies would face unbudgeted costs and massive administrative gridlock. These infrastructure costs would inevitably be passed down to customers and individual drivers.
Alphabet champions a reformed tax regime where vehicle taxation is embedded directly into public and commercial EV charging costs. This infrastructure-based model would function similarly to the traditional fuel duty system, ensuring drivers are taxed fairly and automatically based on the actual mileage they cover.
Caroline Sandall-Mansergh, Alphabet’s consultancy and channel development manager, believes drawing on charging infrastructure is the key to providing long-term policy clarity.
By shifting the focus to a charging tariff tax model, the Government could eliminate the severe administrative burdens associated with the current eVED proposal.
An infrastructure-led charging tax would also protect vulnerable salary sacrifice schemes that help lower-paid employees access clean vehicles.
According to Alphabet, the proposed eVED framework is expected to add £15 to £30 to monthly vehicle costs. Because many low-income workers choose EVs based on strict affordability limits linked to minimum wage levels, these flat monthly hikes risk entirely eliminating the cheapest EV options from the market.
“Even small extra monthly costs can push vehicles out of reach, not just increasing prices but eliminating options entirely,” Sandall-Mansergh added. “The risk is that tax changes will remove this benefit for those it helps most, contradicting the Government’s stated equity goals.”
