Will EV charge start a new road user payment journey?

THE NEW ELECTRIC VEHICLE eVED mileage charge, widely trailed pre-budget, has been confirmed by the Chancellor as planned to be introduced in 2028.

It marks a potentially highly significant moment in the evolution of the road user tax system, opening the door to a much wider framework for all vehicles to contribute to the highway capacity they travel on, based on road usage, not just fuel consumption.

The current plan, now up for consultation, outlines a system designed for the immediate issue of collecting a new revenue stream from EVs for the Treasury, but meanwhile paving the way as the number of petrol and diesel vehicles on the road declines for universal implementation of a charge directly linked to all road user activity, potentially related linked to distance, time and place.

While the planned eVED system will only target EVs and PHEVs from April 2028, the long-term vision must surely be a system that applies to all vehicles, as all contribute to road wear and tear and congestion, ensuring fairness and ensuring an appropriate Treasury income.

Fully electric cars will be charged at around 3 pence per mile, while plug-in hybrids will pay approximately 1. 5 pence per mile when the new scheme starts These rates are expected to be around half the per-mile equivalent of current petrol fuel duty. The charge will be administered through the existing VED system, with mileage likely checked annually during the MOT test or through self-reporting. The government is currently consulting on the specifics. The Office for Budget Responsibility (OBR) estimates this measure will generate approximately £1. 1 billion for the Treasury in the 2028-29 financial year, rising to £1. 9 billion by 2030-31.

This will not be just of interest to the Treasury as an important new element of its revenue collection, but also to those involved in transport policy and planning, both nationally and locally, as well as the pathway to Net Zero.

Accompanying measures will at last see an increase in the existing fossil fuel duty, which has been frozen since 2011 and is set to increase in stages from September 2026 after the current freeze ends. The declining revenue from this tax, which currently raises around £24 billion annually, has necessitated the new approach.

At some point, however, there will clearly need to be a fundamental changeover between how the fossil fuel to power internal combustion engines is taxed, by abolishing Fuel Duty as the transition to electric vehicles accelerates, either by a straight switch or some form of gradual phase out.

The new EV taxing system is for the moment low-tech, and designed to be non-intrusive. Drivers will simply declare their estimated annual mileage when paying their annual VED (albeit with the option of staged payments) with the Government explicitly stating there will be no ‘Big Brother-style’ tracking devices installed in cars to monitor location or time of travel. Most new cars, of course, already have such a capability as an integral part of their automotive electronics and digital system management. Few will not imagine that something will be harnessed from that in due course to provide the relevant data on payments due and actually collect the money, if not initially made a requirement, at least an option.

For the moment, mileage will be audited annually during the vehicle’s MOT test using odometer readings. For new cars not yet subject to an MOT (under three years old), a separate mileage check at an accredited centre will be required annually, with the government covering the check cost. If a driver overestimates their mileage, a credit will be applied for the next year; if they underestimate, they will need to top up the payment.

As well as bringing more money to the Treasury, the significant revenue raising power of road-user charging could plug huge holes in local government funding, while empowering those local authorities who want to collect revenues to support public transport and deliver more people-friendly environments.

Despite the clunky operational model, there are a number positive aspects to this, in particular that it authorises the process of charging for road use as part of the Finance Bill, which means the commitment is being made at the top of government, not just as an idea from transport experts.

Exploring both the detail and wider implications of the Government decision on EV charging for transport policy more generally in TAPAS (3 December 2025), Pete Dyson points to some important potential consequences.

It could have behavioural change aspects,he observes, as it means the motoring cost per mile could be more directly perceived by drivers, although still not a charge ‘to pay as you go’ in a practical sense, a technologically feasible step the government has ruled out - for the moment at least.

One is that both petrol and diesel vehicles are now seemingly in play for regular uplifts to what they pay, including the fact that eVED now closes the door on the principal objection that EVs are a ‘rich persons’ get out to the charges that fossil-fuel vehicles pay. It opens the door to small regular rises in fuel duty, providing overall headline inflation is kept under control.

Dyson also notes the connection between the national vehicle charging framework and prospective opportunities through devolved powers for congestion charging and tolls (aka ‘cordoning’) in particular areas to address the impacts of traffic in towns and cities. Rather than the pure GPS based dynamic road pricing, he predicts the incoming tide of devolution will mean regional powers can be applied to set congestion charges, clean air zones, and parking payment reforms that go into local funds (not general taxation). This significant revenue raising power could plug huge holes in local government funding, while empowering those local authorities who want to collect revenues to support public transport and deliver more people-friendly environments.

On the environmental issue, however, one thing the new system does not deliver is a direct relationship between energy consumption by an individual vehicle and the price paid in the new levy. There is no attempt to link the charge to the energy efficiency of any vehicle type, or how and where it is used. Nor are we close to relating individual energy consumption to the source behind it, for instance the nature and source of power generation, and of the grid delivery system. This new tax is simply designed to collect revenues from a class of vehicles that to date has not paid specifically for its road use.

A quick and simple path to implementation probably offsets the absence of wider open discussion of the full range of options for new ways of road user charging. Starting a discussion of that kind would probably have left any action bogged down in controversy, and at risk of abandonment for political expediency. Its arrival is one benefit of the Chancellor rejecting the easy hit of an big bite increase in income tax to meet her revenue targets in favour of the ‘smorgasboard’ alternative of which this tax forms part. We can meanwhile guess that some in the Treasury were thinking that if they put this in the budget, it might finally get a new road user charging regime started.

In that regard they should be pleased that the move has not prompted a particularly hostile reaction amongst the media or general public. In surveys of the suite of major policies that were extensively trailed before the Budget, the public were broadly divided on new pay-per-mile taxes for electric vehicles, with 38% saying they are right to introduce, but 43% disagreeing, in a UK Gov poll.

The big debate is yet to come, however. Whether to go for some form of dynamic road user /congestion charging or stick with this chosen analogue process of collecting the new mileage -based charge. But if that it does leave the arguments on properly ‘paying for roads’ to one side, they won’t go away, as road users do not yet feel, or contribute directly to, the true costs of either their use of the network or the externalities they generate.

As a reminder of the politics involved, the Budget also saw the Government finally address unwinding of the long-postponed fuel tax concession of 5p per litre dating back to 2022, though in stages: 1p on 1st September 2026, another 2p on 1st December, and final 2p on 1st March 2027. After that we are promised it will rise in line with RPI.

Meanwhile the Rail fare freeze for the next year, also announced in the budget, was something of a surprise – and certainly a move serially rejected by governments of all types over the years. Applying to just under half of all the fares paid, and costing an estimated £145 million in the first year, it does not appear to be integrated with other transport initiatives, but at least marries up with the more interventionist approach by government on the cost of bus travel in recent years.

Now the Government has bitten the bullet of road user charging beyond fuel duty ,it will hopefully make it possible for there to be a serious debate about how the various modes of transport are both paid for and funded to manage capacity, avoid congestion and also encourage modal choice changes through the price mechanism.

That kind of thinking could even address other key issue relating to the provision of additional roads and infrastructure, as without suitable charging messages ,any increase in capacity to address specific issues will likely simply encourage additional general traffic ,and fail to reduce the congestion it seeks to relieve.

Without appropriate charging instruments, a re-orientation of the existing major roads programme towards more efficient demand management and desired environmental outcomes, for example, would seem a very tough ask. And likewise the better overall management of traffic and transport in urban areas.

Peter Stonham is the Editorial Director of TAPAS Network

This article was first published in LTT magazine, LTT927, 3 December 2025.