Fleet operators are being urged to prepare for the extra workload eVED (electric vehicle excise duty) will inevitably now bring when it is introduced in less than two years’ time.
The Treasury has confirmed fleet-focused changes to the incoming pay-per-mile tax for electric cars following warnings that the system was complex enough to risk a £260 million annual compliance bill for operators – excluding the tax itself.
Announced during last year’s autumn budget, eVED is set to introduce a 3p per mile tax levy for EVs and 1.5p for plug-in hybrids from April 2028, aimed at plugging a forecast £12 billion hole in fuel duty revenue by the 2030s as drivers buy less petrol and diesel.
The proposal, which was put out for public consultation in November last year, suggested drivers should estimate and pay for the next year’s mileage in advance as part of annual VED (road tax) renewals, then visit an MOT station to have their mileage verified and settle the difference 12 months later.
This attracted widespread criticism from fleets, with warnings that the process of estimating and verifying mileage would be costly and disruptive for operators – especially with job-need vehicles.
Among them, industry body the British Vehicle Rental and Leasing Association (BVRLA) calculated a £75m annual administrative burden and £185m in lost productivity as vehicles were taken off the road for mileage checks. That excludes the costs of implementation, mileage readings and the tax itself.
The Treasury’s response to the consultation, which received more than 5000 responses, includes several carve-outs that streamline eVED for fleets.
Mileage verification will now begin when the vehicle has its first MOT test, typically at three years old. That’s aligned with the length of a typical lease contract, so it removes the need for external checks for most company car and salary-sacrifice vehicles.
Instead, drivers will be able to provide their own mileage readings and settle the balance when vehicles change hands or have their first MOT. The Treasury expects the risk of large eVED settlements at that point will deter people from under-estimating their mileage.
Fleets will be able to manage those estimates centrally, pay for their aggregated mileage in bulk and settle any balances when the vehicle is sold. The Treasury proposed systems enabling them to use data from connected cars, but added that further collaboration and testing with fleets would be needed before eVED comes into force.
Although Dale Eynon, government affairs and policy lead at the Association of Fleet Professionals, is optimistic that those discussions could “iron out further issues”, he added that larger changes are unlikely.
“Our advice to the fleet community is to prepare for the extra workload eVED will generate,” he said. “We will, of course, continue to aim for further changes to the current proposals as well as pushing for a delay in implementation until at least 2030, when the electric car market will have further matured.”
The BVRLA also welcomed the changes, but the organisation’s CEO, Toby Poston, added caution about timing.
