EV road pricing: what pay-per-mile tax could mean for fleets and leasing
Electric vehicles have changed the way businesses think about running costs. For many fleets, the move from petrol and diesel to electric has helped cut fuel spend, reduce tailpipe emissions and improve company car tax efficiency. But from April 2028, another cost is expected to enter the equation: electric Vehicle Excise Duty, usually referred to as eVED.
The proposal is simple on the surface. Fully electric cars would be charged 3p per mile, while plug-in hybrid cars would be charged 1.5p per mile. These rates would sit alongside existing Vehicle Excise Duty and are expected to rise over time in line with inflation.
For private drivers, this may feel like another annual motoring cost. For fleets, leasing companies and salary sacrifice schemes, it could be more complicated. The real issue is how mileage is estimated, checked, reported and budgeted across hundreds or thousands of vehicles.
Why is eVED being introduced?
The Government has a long-term fuel duty problem. Petrol and diesel drivers pay tax every time they fill up. Electric car drivers do not pay fuel duty, so as more vehicles move away from combustion engines, fuel duty revenue falls.
A mileage-based charge is designed to make EV and plug-in hybrid drivers contribute towards road taxation in a different way. The Government has also said the rates are set below the equivalent fuel duty paid by many petrol and diesel drivers, so there is still intended to be a financial incentive to choose electric.
What could this mean for fleet operators?
For fleets, the headline cost is only part of the story. A fully electric company car covering 20,000 miles a year would attract £600 in eVED at the proposed 3p per mile rate. A plug-in hybrid covering the same mileage would attract £300 at the proposed 1.5p per mile rate.
That matters, but fleet managers will also need to think about how the charge is budgeted. Many leased vehicles are less than three years old and may not have an MOT during the normal operating cycle. If mileage checks rely on annual estimates or manual readings, businesses will need a robust process for capturing, checking and reconciling mileage.
This is where fleets should start planning now. Accurate mileage management already affects contract terms, excess mileage risk, servicing schedules, tyre replacement, insurance, accident risk and replacement cycles. eVED would make accurate mileage forecasting even more important.
Will EVs still make sense for fleets?
In most cases, yes. EVs can still deliver lower running costs, especially where drivers can charge at home, at work or on a controlled charging tariff. They also remain highly attractive for company car tax compared with many petrol, diesel and hybrid alternatives.
However, the calculation will become more detailed. Fleets should look beyond monthly rental and start comparing the full life cost of each vehicle. That should include lease rental, insurance, maintenance, tyres, charging, public charging costs, driver mileage, eVED, downtime and expected replacement cycle.
What about salary sacrifice?
Salary sacrifice remains one of the most attractive ways for employees to access a new electric car. The low Benefit-in-Kind rate for zero-emission cars is still a major advantage, even though it is gradually increasing. But employers will need to be clear about who pays any future mileage-based charge and how it is communicated to employees.
A good scheme should make this clear before the driver orders a car. It should also help employees understand how their annual mileage affects their overall cost.
What should businesses do now?
The most sensible first step is to get mileage data in order. Review actual mileage against contracted mileage, identify high-mileage drivers, check where EVs and plug-in hybrids are already being used and build eVED into future whole-life cost modelling.
Businesses should also review how mileage is collected. Telematics, connected vehicle data, fuel and charge card data, service records and driver declarations can all help build a clearer picture. The aim is not to create more admin. It is to stop unexpected costs appearing at renewal, defleet or annual tax reconciliation.
Rivervale view
eVED should not stop businesses moving to electric, but it does make planning more important. The fleets that will cope best are the ones with clean data, clear policies and proper whole-life cost comparisons.
At Rivervale, we help businesses compare leasing options, review running costs and build practical fleet strategies around the way their drivers actually use vehicles. Whether you run five company cars or a much larger mixed fleet, now is the right time to start preparing for the next stage of EV taxation.
Got questions?
Speak to one of our fleet team today to find out how Rivervale can make managing your fleet of vehicles less of a headache.
Frequently Asked Questions
eVED stands for electric Vehicle Excise Duty. It is a proposed mileage-based tax for electric and plug-in hybrid cars from April 2028.
The current proposal focuses on cars. Vans, buses, coaches, motorcycles and HGVs are not expected to be in scope at launch, although future changes have not been ruled out.
For many drivers and businesses, yes. EV leasing can still offer tax, running cost and sustainability benefits. The key is to compare the full life cost, not just the monthly rental.
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Sources: Fleet News iQ Q2 2026 identified eVED as a major fleet issue. Verified against GOV.UK eVED consultation, House of Commons Library briefing and BVRLA commentary on projected fleet compliance costs.
