Treasury makes EV 3p per mile automatic tracking key update

Treasury makes EV 3p per mile automatic tracking key update Budget 2026 documents released after Chancellor John Healey’s speech revealed The government is making plans to track electric vehicles automatically so the owners will pay road tax. In the Budget 2026 document released after Chancellor John Healey’s speech, it revealed that officials plan to use EV connectivity to show how many miles they’ve done. Electric Vehicle Excise Duty (eVED), a national pay-per-mile road tax starting on April 1 2028. From then Fully Electric Cars will be Charged at 3p per mile. Plug-in Hybrid Cars (PHEVs) are to be charged at a lower rate of 1.5p per mile since they already pay fuel duty on petrol. Questions have been asked as to how mileage will be worked out as fuel duty is raised at sale. In the Budget Document, the Treasury said: “As announced at Budget 2025, the government will introduce Electric Vehicle Excise Duty (eVED), a new mileage-based charge for electric and plug-in hybrid cars, from April 2028.” Officials said it had listened to feedback through the publich consultation and has made changes to the scheme. Key changes: The government said it will introduce a mileage estimation tool to support motorists that will be available at launch in April 2028. The government said it is undertaking proof of concept work to assess how features such as benchmarking could help motorists to estimate their mileage. It will develop an opt-in system to make use of vehicles’ in-built connectivity. ‘eVED Connect’ will allow motorists to use this connectivity so that they do not have to report their mileage manually. The technology could also support mileage estimation for the coming year. The Treasury said it was aiming to develop an automated refunds model by 2030, making refunds easier and available in more circumstances, such as when a motorist overestimates their mileage or sells their car. It also pledged to work closely with industry and motoring representative groups ahead of implementation, and make available further guidance for fleet operators later this year. The pay per mile rate will be uprated in 2029 to 2030, and in future years, in line with Consumer Prices Inflation (CPI), to ensure that the tax maintains its real-terms value, HMRC said. drivers will: - provide an odometer (mileage) reading from their car - estimate their mileage for the forthcoming tax period (typically a year) Motorists will pay an upfront charge based on their estimate or spread their payment across the year, with the year-end mileage reading triggering a refund. Mileage data from cars is currently collected at annual MOTs and is available to view for most cars on GOV.UK. Where applicable, the government intends to use this data to ensure that user-supplied mileage is consistent and up to date. This means if a car is already subject to an MOT, there will typically be no additional steps for checks. HMRC said: “eVED is intended to help replace lost fuel duty revenue from cars over the long term so, like fuel duty, the amount motorists pay will vary based on the amount they drive.” This measure is expected to impact around 5.6 million vehicles in the financial year 2028 to 2029. Motorists will need to pay eVED when they first renew their VED after April 2028. Following the Budget, RAC senior policy officer Rod Dennis said: “RAC research shows high fuel prices are prompting more people to consider going electric. But those who can’t charge at home may be frustrated that VAT wasn’t cut on public charging to make it more affordable. Drivers who rely on public chargers continue to pay the full 20% VAT rate, which is far higher than the 0% currently charged on domestic electricity in Great Britain. “Reducing VAT on public charging would have been an obvious way for the Government to make the switch more accessible for more people. Instead, following its review of public charging costs, it appears to be exploring a different approach that would allow drivers to use lower-powered public chargers at the same cost as charging at home. We look forward to hearing more details on this.”