eVED | ITS Now

The Coming Wave of Road User Charging for EVs

21st July 2026 - Alistair Gollop for ITS Now

The Office for Budget Responsibility has been warning for years that fuel duty receipts would collapse as petrol and diesel cars fade from the fleet. What once looked like a distant problem has become an urgent one. With EV adoption accelerating and internal combustion engines heading for obsolescence, the UK Government has now set out how it intends to replace that lost revenue. In doing so, it has become one of the first major economies to move decisively from speculation to implementation, signalling the beginning of a new era in how nations fund their roads.

The announcement arrived in July 2026, when ministers confirmed the introduction of Electric Vehicle Excise Duty (eVED) a mileage-based tax for battery-electric, plug-in hybrid and hydrogen vehicles. It will take effect from April 2028, marking the most significant reform of motoring taxation in decades. The principle is straightforward, EV drivers will contribute per mile, just as petrol and diesel drivers effectively do through fuel duty. The initial rates are deliberately modest, set at three pence per mile for battery-electric and hydrogen fuel-cell cars, and half that for plug-in hybrids. They will rise annually with inflation, but the Government has been careful to emphasise that EVs will retain a tax advantage for the foreseeable future.

What is striking is not the rate but the design. Rather than introducing in-vehicle telematics, GPS tracking or real-time monitoring, the Government has opted for a light-touch system built around odometer readings. Drivers will simply submit their mileage when renewing their vehicle excise duty, estimate their usage for the coming year, and reconcile at year-end. MOT data will provide verification, ensuring accuracy without intrusiveness. It is a deliberately frictionless model, crafted to avoid the political toxicity that has long surrounded road pricing debates.

This approach reflects a clear shift in tone. Ministers have framed the change not as a penalty for choosing an EV, but as a matter of fairness. As the consultation response put it, drivers of electric vehicles currently make no equivalent contribution to fuel duty, and by 2030 one in five motorists would pay nothing at all if the system remained unchanged. The Government’s argument is that all vehicles cause congestion, all vehicles use the road network, and all should contribute to its upkeep. The era of “free motoring” for EVs was always going to be temporary, and now the transition has a date.

The UK’s move is part of a wider global pattern. Around the world, treasuries are confronting the same fiscal cliff edge. Fuel duty is not merely a transport tax, it is a major pillar of national revenue. As EV adoption grows, governments face a convergence of pressures: the need to replace billions in lost income, the need to maintain fairness between vehicle types, and the need to preserve the behavioural link that has made fuel duty so effective for decades. Mileage-based charging is emerging as the most politically viable solution because it is familiar, predictable and easy to administer.

Yet the politics remain delicate. Road user charging has always been a fraught subject, haunted by fears of surveillance and government overreach. Full GPS-based road pricing has been discussed for decades but never implemented at scale, largely because public trust has never been strong enough to support it. The UK’s eVED model sidesteps that entire debate. By relying on odometer readings, it avoids the “Big Brother” narrative entirely and positions itself as a pragmatic, non-intrusive reform. It is a tax designed not to provoke.

Even so, this is almost certainly the beginning rather than the end. As EVs become the majority of the fleet, governments may face pressure to refine the system. Congestion management, peak-time pricing, urban-rural differentiation and heavy-vehicle surcharges are all likely to re-enter the conversation. For now, the Government has chosen simplicity over sophistication, but future iterations may need to grapple with more complex questions of equity and behaviour.

Equity, in particular, will become a defining issue. Mileage-based taxes can fall unevenly across society. Rural drivers often travel longer distances. Lower-income households may rely on older EVs with limited charging options. Tradespeople and delivery drivers may face higher costs simply because their work requires movement. The Government acknowledges these concerns but argues that usage-based charging is inherently fairer than flat fees. EV drivers will still pay less than ICE drivers, preserving the incentive to switch. But as electrification becomes universal, the fairness debate will intensify, and policymakers may need to consider more nuanced approaches.

For now, the odometer-based model is politically and practically sufficient. It mirrors the logic of fuel duty without introducing new technology or new anxieties. It is easy to administer, easy to understand and easy to justify. But it cannot distinguish where or when miles are driven, cannot support congestion management, and cannot incentivise off-peak travel. If governments later want to use road pricing as a tool for shaping behaviour rather than simply replacing revenue, more sophisticated systems may be required.

The introduction of eVED marks a turning point in the UK’s transport and fiscal landscape. It is a quiet but decisive acknowledgement that electrification changes everything, not just how vehicles are powered, but how roads are funded. Other countries will watch closely, and many will follow. The coming wave of road user charging will be shaped by fiscal necessity, political realism and public trust. The UK’s model is cautious, pragmatic and designed for acceptance. It is not the final form of road pricing, but it is the first step into a future where mileage, not fuel, becomes the currency of road use.

That balancing act is reflected in the response from motoring and transport bodies. The AA has accepted the fiscal logic but warned against undermining the transition, with AA president Edmund King saying: “Whilst we acknowledge the Treasury will lose fuel duty revenue as drivers go electric, the Government must tread carefully in case their actions slow down the transition to EVs.” The RAC has struck a similar note, arguing that “the devil is very much in the details” and warning that taxing plug-in vehicles per mile “could slow down the transition to electric vehicles”. ITS UK, by contrast, has welcomed the shift more positively. Its chief executive Max Sugarman described the EV mileage charge as “much needed” to address falling fuel duty receipts and said it could help move the UK towards “a fairer, more effective road tax system, that charges based on usage”. He continued, “However, the Government is insisting it will not offer the option of a location-based charging model from the beginning. This is a missed opportunity, it means transport authorities will have fewer levers to manage their networks and that drivers travelling overseas in UK-registered vehicles will still have to pay eVED. We strongly urge the Government to reconsider its position on this area.”

Kapsch TrafficCom has been clear in its public commentary that the future of road-user charging lies in GNSS-based, digitally connected systems. In recent LinkedIn posts, the company highlights how the collapse of fuel-tax revenues and the rapid growth of electric vehicles demand a shift to distance-based charging models that are secure, interoperable and simple for drivers. As a Thought Leadership Partner for the Road User Charging Conference 2026, Kapsch emphasises that digital connectivity and modern tolling platforms are essential to delivering fair, future-proof charging schemes across Europe.

Electrification was always going to reshape the economics of mobility. With eVED now confirmed, that reshaping has begun in earnest. The question is no longer whether governments will replace lost fuel duty, but how quickly they will move and how far they will ultimately go.