The Government has published detailed proposals for its new electric Vehicle Excise Duty (eVED) system, confirming that drivers will be required to estimate and self-report their mileage, with annual audits linked to MOT testing. Despite expectations across the industry that digital odometer or telematics data would underpin any future mileage-based tax, the consultation signals a deliberate move toward a low-tech, privacy-focused framework administered entirely by the DVLA.
A bolt-on to existing VED processes
To minimise complexity, eVED will be integrated directly into the existing VED system. Motorists will estimate the mileage they expect to travel in the year ahead when paying their VED, choosing either to pay the full amount upfront or spread payments throughout the year. At year end, drivers must submit their actual mileage, triggering a reconciliation and—where required—additional payments or refunds. Mileage readings will be validated annually, typically during the MOT, with new cars checked around their first and second registration anniversaries.
Government officials argue this approach keeps the system simple and avoids creating new digital infrastructure or compliance mechanisms. For fleets, however, the model raises important operational questions about reporting accuracy, cashflow management, and audit risk, especially for vehicles operating variable duty cycles.
Audit and enforcement through MOT data
By formalising mileage verification through MOT centres, the Government is establishing a clear audit pathway. Any discrepancy between declared mileage and MOT-verified mileage could trigger investigation. For large fleets using pool vehicles, rental assets or short-term hire, this places a renewed emphasis on robust internal mileage capture and transparent record-keeping.
Foreign mileage caught deliberately in scope
Despite concerns from drivers who regularly operate abroad, the Government has confirmed that all mileage—UK and overseas—will be taxed under eVED, mirroring the current treatment under fuel duty. Ministers have rejected calls to exclude non-UK mileage, citing privacy issues and the relatively small number of UK-registered vehicles travelling overseas each year. Introducing location-based deductions, the consultation notes, would require monitoring technology the Government has explicitly ruled out.
Privacy drives rejection of telematics-based models
Crucially, the document confirms the Government has rejected any form of real-time, location-based or telematics-derived road user charging. This marks a notable policy decision, signalling that eVED is not the first step towards GPS-tracked road pricing. Instead, it represents an interim revenue solution that preserves driver privacy while beginning the shift toward mileage as the primary basis of future vehicle taxation.
A significant administrative shift for fleets
For fleet operators, eVED introduces new pressures:
Ensuring accurate annual mileage estimation
Managing reconciliation payments and year-end adjustments
Auditing mileage declarations across large driver populations
Establishing defensible mileage records in the event of DVLA review
Understanding the financial impact of overseas business travel
While the consultation remains open, early industry sentiment suggests the proposed system may be administratively burdensome and operationally imprecise, particularly for fleets accustomed to automated mileage capture via telematics.
FleetWise will continue to monitor developments as the industry responds and the Government refines the final structure of eVED.
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