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Posted on the 16th July 2026 in PHTM News

GOVERNMENT CONFIRMS THE TERMS OF ITS NEW ELECTRIC VEHICLE EXCISE DUTY (EVED) SCHEME

• Pay-per-mile scheme will START 1st April 2028

• Applies to electric cars, plug-in hybrid electric vehicles (PHEVs) and hydrogen fuel cell cars

• 3p per mile for EVs, 1.5p per mile for plug-in hybrids

From launch, EVs and hydrogen fuel cell cars will pay three pence per mile, while PHEVs will pay a lower rate of 1.5 pence per mile as those drivers also pay fuel duty. However, the eVED rate will increase every year in line with the consumer price index.

Legislators say that an EV driver covering 8,000 miles per year will pay £240 in eVED, while a petrol or diesel car driver would pay £480 annually in fuel duty alone. But high mileage drivers are going to get hit hard by the changes.

Cover 20,000 miles in your electric car, for example, and you’ll need to fork out £600. And that’s in addition to the flat £200 VED rate EV drivers currently pay to keep their cars on the road.

Patrick Gallagher, CEO at Addison Lee, said: "Confirmation that eVED will proceed from April 2028 as a pay-per-mile charge on electric and plug-in hybrid vehicles is a blow to our industry, at a time when operators need support, not new charges.

"Taxi and private hire drivers deliver essential, high-mileage, door-to-door transport services and play a critical role within the wider public transport system. A uniform pay-per-mile charge that doesn't differentiate between private and commercial use risks placing a disproportionate burden on our sector.

"Addison Lee estimates this levy would cost EV drivers on our fleet up to £840 a year, and plug-in hybrid drivers £420 – on top of the £4,700 a year the removal of London's congestion charge exemption already adds to EV running costs.

"We're also concerned about cross-border hiring, where a patchwork of local licensing lets drivers from outside stringent areas, running older ICE vehicles, undercut those of us who've invested in cleaner fleets to meet higher standards.

"The last thing operators need is more costs, complexity, and administrative burden. Government should be clearing the road for electrification across our industry, not putting up new barriers."

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