Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment she has made of the potential impact of a) changes to Vehicle Exercise Duty and b) introduction of a Electric Vehicle Excise Duty on users of the Motability scheme leasing an electric vehicle.

As announced at Budget 2025, the Government is introducing Electric Vehicle Excise Duty (eVED) from April 2028, a new mileage charge for electric and plug-in hybrid cars, recognising that EVs contribute to congestion and wear and tear on the roads but pay no equivalent to fuel duty.

eVED is designed to replace fuel duty for electric and plug-in hybrid cars. This means it will apply to cars driven by those who are wholly or partially exempt from Vehicle Excise Duty (VED), but where their petrol or diesel equivalents would be subject to fuel duty. This includes those who receive the mobility component of certain disability-related benefits (principally Disability Living Allowance or Personal Independence Payment). These groups will continue to receive the same VED exemptions as they do now but will not be exempt from eVED, as they are not exempt from fuel duty.

As with petrol/diesel vehicles where fuel duty applies, eVED will also apply to cars that are leased. The leasing company will typically be responsible for paying eVED and can choose how to pass on to their customers.