Understanding EV taxation in the UK
Electric vehicle taxation in the UK has changed in recent years and will continue to evolve. From April 2025, electric vehicles are now subject to Vehicle Excise Duty, also known as road tax. This means EVs are no longer exempt from road tax and are treated in the same way as petrol and diesel vehicles for ownership taxation.
The government will introduce a further change in April 2028, which introduces a mileage based charge for electric vehicles known as eVED. Our blog explains what is already in place today and what is confirmed for 2028, along with what it could mean for EVision customers who rent electric cars, vans and trucks.
What you already pay today (VED)
Electric vehicles are currently subject to Vehicle Excise Duty. This is an annual road tax based on vehicle type and emissions banding. If you rent an electric vehicle through EVision Electric Vehicles, the final cost is already included within your rental price. You do not pay road tax separately when hiring a vehicle. It is simply part of the overall cost of operating the vehicle.
What is changing from April 2028 (eVED electric vehicle tax UK)
The UK government has confirmed plans to introduce a new mileage based charge for electric vehicles called eVED. This will apply alongside existing Vehicle Excise Duty.
In simple terms, this means EV drivers will pay:
• An annual road tax (VED)
• A charge based on how many miles they drive (eVED)
The system is designed so that drivers contribute more fairly based on both vehicle ownership and usage. The government is currently finalising the per mile rate and billing process through consultation.
How eVED is expected to work
While full details are still being developed, the structure of eVED is already clear. Drivers will pay based on mileage driven during the year. The more miles driven, the higher the total cost. Lower mileage drivers will pay less overall.
Importantly, drivers will not need GPS tracking devices. Mileage is expected to be recorded in a similar way to existing MOT or servicing records. Drivers will then pay eVED alongside standard Vehicle Excise Duty.
What this means for EV rentals
At EVision Electric Vehicles, customers use electric cars and vans in different ways. Some rentals last a single day, while others run for months or longer. Because of this, the impact of eVED depends on how the system is implemented, but the principle remains the same: costs will be linked to mileage.
Short term rentals
For daily, weekly or monthly rentals, EVision would calculate mileage costs using the distance driven during the hire period. Therefore, this would be similar to how many rental agreements already handle excess mileage charges. Customers would simply return the vehicle as normal, and mileage would be recorded at check in. EVision would then calculate any usage costs as part of the final invoice.
Long term rentals
For long term rentals, typically one year or more, rental providers would likely monitor mileage over time. Rental providers could include costs within monthly billing or reviewed periodically depending on the agreement structure. Long term customers already tend to focus on total cost of use rather than individual tax components. eVED electric vehilce tax UK would simply become one part of overall operating costs alongside insurance and maintenance.
What eVED could mean in real terms
To help understand how a mileage based charge might affect running costs, it is useful to look at some simple examples.
The government has indicated a rate structure broadly equivalent to a few pence per mile, with EV rates set lower than the equivalent fuel duty paid by petrol drivers.
Below is an illustrative example using a 3p per mile figure, which has been widely referenced in policy discussions. It is not a final confirmed rate, but it helps show how costs scale with usage.
Example of how eVED could scale with mileage
| Annual mileage | Estimated eVED cost |
|---|---|
| 8,000 miles | £240 |
| 10,000 miles | £300 |
| 15,000 miles | £450 |
| 18,000 miles | £540 |
| 20,000 miles | £600 |
| 25,000 miles | £750 |
As expected, lower mileage drivers would pay less, while higher mileage drivers would contribute more.
How this compares to petrol and diesel running costs
Even with a mileage based charge in place, electric vehicles are still expected to remain competitive compared to petrol vehicles.
A typical petrol car currently incurs significant fuel duty within its running costs, before the cost of fuel itself is considered. When broken down per mile, this can equate to several pence per mile in tax alone.
By comparison, an electric vehicle charged at home, particularly on an off peak tariff, can cost only a few pence per mile in electricity.
When combined with an estimated eVED charge, total EV running costs are still expected to remain well below the equivalent cost of petrol or diesel driving for most users.
The gap is likely to narrow slightly for drivers who rely heavily on public rapid charging, where electricity costs are higher, but the overall cost advantage is still expected to remain in most scenarios.
Why this matters for EVision customers
For EVision customers, the key point is that eVED is expected to be managed at vehicle ownership or fleet level, rather than requiring individual drivers to interact directly with government systems.
In most rental scenarios, any mileage based charges are likely to be reflected within the overall rental agreement, rather than requiring customers to register or pay separately through a government portal.
For short term rentals, mileage is already tracked as part of the hire process, so any future changes would simply form part of standard end of hire billing.
For longer term rentals, the exact approach may vary depending on how agreements are structured. Costs could be included within monthly pricing or reconciled based on mileage over time.
As the final system design is still subject to consultation, the precise commercial handling has not yet been confirmed.
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book your ev hireAll information correct as of 4th June 2026.
