eVED pay-per-mile road tax decoded: will it make EVs more expensive than petrol cars?

In roughly two years, drivers of electrified vehicles will be subject to a new pay-per-mile form of road tax, also known as eVED (Electric Vehicle Excise Duty). This will force motorists to pay, on average, an additional £200-300 per year on top of their standard annual road tax payment, calculated by tallying how far they’ve driven.

Such a proposition has elicited mixed reactions from across politics, the car industry and the UK public alike, and much remains unclear in regard to its implementation. With this in mind, and to answer some of the most popular questions you might have, we’ve put together a full guide on the topic, doing the necessary maths and speaking to the public to get an overall view of the scheme’s perception and potential effects.

Who will pay the eVED pay-per-mile tax?

From April 2028, drivers of electric cars, ranging from SUVs such as the Tesla Model Y, to superminis such as the Renault 5 will begin incurring eVED which, if current plans remain in place, will cost three pence per mile driven.

Those driving a plug-in hybrid (PHEV) such as the Toyota Prius will also have to pay, but at a rate of one-and-a-half pence per mile – both this and the EV figure will increase annually in line with the Consumer Price Index. All of this will come on top of Vehicle Excise Duty, which currently stands at £195 per year, but is likely to have increased somewhat by the time eVED comes into force.

Will pay-per-mile tax make EVs more expensive than petrol?

A key selling point of EVs has long been their low running costs. However, road pricing will narrow the gap between electric and ICE in terms of how much drivers spend on fuel.

Comparing a Volkswagen Golf with its electrified counterpart, the ID.3, our analysis shows that even following the tax’s introduction, running an EV will remain the cheaper option by far when charging at domestic off-peak rates. 

According to the official WLTP combined cycle efficiency figures, an ID.3 Pure Match will set you back just two pence per mile (plus three pence for the new tax) at the average off-peak home electricity rate of eight pence per kilowatt hour (kWh). 

At the same time, the petrol and diesel Volkswagen Golf equivalents will cost around 12 and 10 pence per mile respectively at the current price for fuel – although bear in mind that fuel duty is expected to rise in the coming years.

When plugging in at the current Ofgem energy price cap of 26p per kWh, things get a little closer; nine pence per mile with the mileage tax included would make the ID.3 roughly the same cost to fuel as a petrol or diesel Golf. 

Charge using more expensive public charging infrastructure, however, and you can be paying up to 90p per kWh. This would make per-mile fuel costs of our ID.3 significantly more than filling up a Golf with petrol. 

There are, of course, many variables in calculating fuel costs – let alone overall car running costs – but the pay-per-mile tax is going to make it less likely that the sums add up in the electric car’s favour. 

How will eVED pay-per-mile tax work?

How exactly the eVED pay-per-mile road tax scheme will work is subject to an ongoing consultation. However, reading the government’s published consultation documents does give us a bit of foresight into what sort of thing we can expect.

As part of a car’s annual MoT, each car will have its mileage recorded and then the driver will be charged by calculating how far the car has driven since it last underwent the test. Cars less than three years old will instead have their odometer readings recorded as part of an annual mileage check, with these likely taking place at accredited garages and MoT centres.

Once a year, drivers will need to log on to the DVLA website and pay their eVED alongside their annual road tax. Here, they will be able to provide an estimate of their annual mileage, much like when you apply for car insurance, then choose to pay in one lump sum or spread the cost across multiple payments over the course of 12 months. At the end of the year and once the mileage has been collected, drivers will either receive a rebate or a bill depending on whether they were under or over the prediction.

It’s also possible that dealers selling new electric and plug-in hybrid cars may be able to pre-package a certain amount of eVED mileage within the cost of the car, much like those “xxx-miles of free fuel” you see crop up from time-to-time. Again, we have to wait until the end of the consultation to know for sure.

The AA’s president, Edmund King, said: “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.”

Will eVED slow down EV sales? 

As mentioned, the pay-per-mile tax has received a rather mixed response. It’s designed to fill the financial black hole created by fewer people paying fuel duty in the switch over to EVs. 

According to the Office for Budget Responsibility, which leaked the tax in a report prior to Chancellor Rachel Reeves even announcing it at the 2025 Budget, eVED could raise as much as £1.4 billion per year by 2029-30. This is despite the fact that the OBR also estimates that by the end of 2031 there will be 440,000 fewer EVs being sold than there would have otherwise been as prospective buyers are put off by the additional charges.

And that’s exactly the point: is now the wrong time to be introducing such a scheme, especially given that despite the introduction of the Electric Car Grant, it looks like the UK won’t hit the tough targets for EV sales set by the government?

According to a survey of Auto Express readers, almost two in five (37 per cent) said they believed the charge to be fair, as opposed to a quarter (23 per cent) who saw it as an unjust attack on EV drivers. Roughly one third (32 per cent) said its introduction was poorly timed and will slow down EV sales.

To combat the potential loss in sales, Labour has also announced plans to raise the threshold above which the £425 Expensive Vehicle Supplement to VED is paid; from April 2026, only EVs costing £50,000 or more will be liable, as opposed to the current £40,000 threshold, which will remain for other fuel types.

Nevertheless, a spokesperson for Ford UK said: “This Budget sends a confusing message at a critical moment in the EV transition. Extra investment in charging and the Electric Car Grant is positive, but it cannot offset the impact of a poorly timed pay-per-mile charge on EVs and hybrids. Against a hugely challenging market, and compliance targets drifting out of reach, this is the wrong tax at the wrong time.”

Such a sentiment is mirrored by Delvin Lane, the CEO of charging firm Instavolt, who pointed out how investment in roads and charging infrastructure is being “overshadowed by new cost pressures, including the introduction of pay-per-mile charging. Such policies risk reducing EV uptake and weakening the investment case for expanding the rapid-charging network.”

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