United Kingdom introduces new tax for electric vehicles

The United Kingdom is implementing new fiscal measures and reviewing electric vehicle (EV) mandates as the country transitions away from internal combustion engines. To compensate for lost fuel tax revenue, the government is introducing the Electric Vehicle Excise Duty (eVED). This new charge will be applied in addition to the existing annual Vehicle Excise Duty (VED).

Under the proposed eVED, fully electric vehicles will be charged 3 pence per mile, while plug-in hybrids will face a rate 50% lower. These rates are expected to be adjusted annually based on inflation. For a driver covering approximately 14,967 kilometers annually, the additional cost for an electric vehicle would be roughly 300 euros.

Simultaneously, the government is evaluating its Zero Emission Vehicle (ZEV) mandate. While the official target aims for 80% of new car sales to be zero-emission by 2030, current market trends show a gap between political goals and actual registration rates. Although battery electric vehicle registrations grew by 49% year-on-year in July, the industry is pressing for flexibility regarding the mandatory sales quotas.