The decision follows a public consultation on the Electric Vehicle Excise Duty (eVED) scheme, which will introduce mileage-based taxation for electric vehicles and plug-in hybrids. While ministers have amended several elements of the policy after receiving thousands of responses, concerns remain over how the system will operate in practice.
The eVED scheme is intended to replace declining fuel duty revenues by charging electric vehicle owners according to the distance they drive. According to the Government’s consultation response, fully electric vehicles will pay 3p per mile, while plug-in hybrid vehicles will be charged 1.5p per mile from April 2028.
The consultation attracted more than 5,000 responses from motorists, businesses and motoring organisations. Following that process, the Government confirmed it would not proceed with several proposals, including mandatory additional mileage checks for vehicles under three years old, which are currently exempt from annual MOT testing.
Government Confirms Revised eVED Measures After Consultation
Under the finalised approach, owners of vehicles less than three years old will submit an odometer reading and estimate their annual mileage when renewing Vehicle Excise Duty. The Driver and Vehicle Licensing Agency (DVLA) will calculate an estimated eVED charge, while official guidance will be published to help motorists estimate their expected mileage.
According to the Government, fleet operators and leasing companies will also benefit from greater flexibility. They will be permitted to use estimated mileage readings, bulk licensing arrangements and more flexible payment options because they manage large numbers of vehicles.
Motorists will have the option of paying their estimated charge upfront or spreading payments across the year. At the end of the period, they will submit their actual mileage to allow the DVLA to reconcile the final amount due. For most vehicles, annual mileage verification will take place during the MOT, while newer vehicles will be checked around their first and second registration anniversaries.
The consultation response also states that motorists experiencing an unexpected change in their financial circumstances will be able to apply for a refund through a short online DVLA application.
Legacy DVLA Systems Prompt Criticism Over Refund Arrangements
Although refunds will be available in certain circumstances, the Government confirmed that automatic refunds will not be introduced when the scheme begins. According to the consultation response, supporting automatic repayments would require significant and complex changes to the DVLA’s legacy vehicle systems.
Ben Nelmes, chief executive of New AutoMotive, welcomed the decision to remove additional mileage checks for newer vehicles but questioned the wider readiness of the scheme. He said the package of measures remained “untested” and warned it risked becoming “an albatross around the neck of the next Chancellor and Transport Secretary”.
Mr Nelmes also criticised the limitations of the current DVLA systems, saying it was “staggering” that they could not automatically process refunds when a vehicle is sold or scrapped. He argued that this should raise questions about the deliverability of the policy.
A DVLA spokesperson said motorists would not lose unused mileage credits under the eVED scheme. Instead, where drivers have paid for more mileage than they ultimately use, the credit will normally be carried forward automatically and offset against future charges. The spokesperson added that refunds relating to changes of keeper and other vehicle lifecycle events would be announced later this year.
