As electric vehicles become more common, the government faces a dilemma: VED revenues will decline as more cars pay £10 or £0 annually. The future of car taxation is under active consideration.
The VED Revenue Challenge
Electric vehicles currently pay minimal VED — £10 per year standard rate — and zero in their first year. As EV adoption grows, the total VED revenue collected will decline significantly. The Treasury has modelled scenarios where VED revenues fall by tens of millions of pounds per year as the vehicle fleet electrifies. This creates pressure to reform how road use is taxed to maintain funding for road infrastructure.
Government Consultations on Road Pricing
The government has repeatedly consulted on road pricing as a potential replacement for or supplement to VED. Proposals have included GPS-based mileage tracking, smartphone app logging, and smart meter-style road use charges. The concept is simple: instead of a flat annual charge, drivers pay per mile driven — making the cost proportional to actual road use. This would replace fuel duty (which also declines as EVs use less fuel) and VED.
Current Status of Road Pricing
As of 2026, no nationwide road pricing scheme has been implemented in the UK. Previous trials in Durham and Cambridge showed the concept is technically feasible but politically sensitive. The current government's position is to maintain VED and fuel duty while monitoring EV adoption rates. However, the 2025 Autumn Statement included no major announcements on road pricing, leaving uncertainty about timing.
How EVs Might Be Taxed
Several options are being considered for taxing EVs in the future: a flat annual EV supplement replacing the £10 standard rate, a per-mile charge for zero-emission vehicles, increased vehicle excise duty for EVs, or a hybrid approach combining elements. The AA and RAC have both published proposals suggesting per-mile charging as the fairest long-term solution, since it ties the cost to actual road use rather than ownership.
What This Means for EV Buyers
If you are buying an EV today, the current VED rules apply for the foreseeable future. The £10 annual standard rate for EVs is locked in for existing owners under current government policy. Changes, if they come, are likely to be implemented gradually and with notice — much like the taper of incentives for EVs over recent years. Monitor DVLA and Treasury announcements for policy updates. The car tax calculator at Cartax.online will be updated to reflect any changes to VED rates.