Committee publication · Correspondence · 14 January 2026 · HC 1593
Letter from the Exchequer Secretary, HM Treasury relating to electric vehicles excise duty, dated 9 January 2026
From: Transport Committee
Inquiry: Supercharging the EV transition
Summary
The Exchequer Secretary responds to Transport Committee questions on the Government's Electric Vehicle Excise Duty (eVED), a mileage-based charge launching April 2028. The Government argues eVED is necessary because EV drivers currently pay no fuel duty equivalent despite road usage, while fuel duty revenues are forecast to halve by the 2030s. eVED will charge at half the petrol/diesel fuel duty rate. The Government commits 80% of early eVED revenue (including £1.3 billion for EV grants and £200 million for chargepoints) to support EV take-up and protect Net Zero goals.
Key findings
- Fuel duty receipts forecast to decline to £12 billion (around half current levels) by 2030s as EV uptake rises; eVED introduced to replace lost revenue while maintaining EV affordability.
- eVED rate set at half the average fuel duty rate paid by petrol/diesel drivers, ensuring EVs remain cheaper to run for most users despite new mileage charge.
- OBR estimates eVED will reduce new EV sales by 120,000 across forecast period (2% of total sales), from pre-measure forecast of 1.7 million annual sales in 2030/31.
- 80% of eVED revenue from first three years reinvested in EV support: £1.3 billion additional Electric Car Grant funding, £200 million chargepoint rollout, and raising Expensive Car Supplement threshold to £50,000 for EVs.
- Government will not mandate vehicle telematics for eVED administration but welcomes opt-in use of in-built monitoring systems; mileage reporting integrated into existing Vehicle Excise Duty renewal process; consultation closes 18 March 2026.
Tone
FactualTopics
Key actors
Ruth Cadbury MP, Dan Tomlinson MP, Office for Budget Responsibility, Department for Transport, Department for Energy Security and Net Zero, HM Treasury
Notable line
“The rate of eVED paid by electric vehicle drivers will therefore be half the fuel duty rate paid by the average petrol/diesel driver …”
Key Quotes
“All vehicles contribute to congestion and wear and tear on the roads, but drivers of petrol and diesel vehicles pay fuel duty at the pump to contribute their fair share, whereas drivers of electric vehicles do not currently pay an equivalent.”
“… the Office for Budget Responsibility (OBR) has forecast fuel duty receipts will decline to around half current levels (around £12 billion) in the 2030s in real terms.”
“The rate of eVED paid by electric vehicle drivers will therefore be half the fuel duty rate paid by the average petrol/diesel driver, ensuring that it will still be cheaper to run an EV for the majority of EV drivers, with a reduced rate for plug-in hybrid drivers.”
“… the G overnment is protecting motorists' privacy through not requiring drivers to report where and when miles are driven, and not requiring the installation of trackers in cars.”
“80% of eVED revenue from the first three years is being reinvested to extend support for EVs and the auto manufacturing industry; this includes £1.3 billion of additional funding for the Electric Car Grant (ECG), £200 million for chargepoint rollout”
Source · parliament.uk record ↗