The UK Is Taxing EV Kilometres From 2028 — Should Australian Drivers Worry?
The UK confirmed a mileage-based EV tax from April 2028. We break down what it means — and why Australia's novated lease EV deal still holds up. Read on.
The UK government has confirmed it will introduce a mileage-based electric Vehicle Excise Duty (eVED) from April 2028, according to a report by The Driven ([Source 1]). Despite fierce pushback from the electric car industry, the policy survived largely intact. EV drivers in Britain will pay a road-use charge based on how far they drive — a direct response to falling fuel excise revenue as combustion-engine cars get phased out.
This is a legitimate policy debate, and it's one Australia will eventually have to face too. Governments collect significant revenue from fuel excise. As EVs grow their share of the fleet, that revenue base erodes. Some form of road-user charge is the logical policy response — the question is timing and design, not if.
What this means for novated lease customers
Right now in Australia, EVs under the luxury car tax threshold remain exempt from fringe benefits tax (FBT) — a significant concession introduced under the Treasury Laws Amendment (Electric Car Discount) Act 2022. That policy has not changed. No Australian road-user charge targeting EVs has been legislated at the federal level as of this writing.
What the UK announcement does signal is that the current window of EV tax concessions has a shelf life everywhere, including here. The Australian FBT exemption is already subject to review, and state-level EV road-user charges have had a complicated legal history. If you're an employee considering a novated lease on an EV, the case for acting while the concessions are in place is genuine — not just a sales pitch.
MillarX recommends talking to your employer's payroll team and getting independent tax advice if you're unsure how your specific situation interacts with FBT exemption rules. We're ACL-licensed and AFCA-registered, and we'll give you a straight answer on what the numbers actually look like for your salary and vehicle of choice.
Common questions
Does the UK mileage-based EV tax affect Australian drivers?
No, not directly. The UK eVED is a British domestic policy. It has no legal effect in Australia. It is, however, a signal of the direction governments globally are heading as fuel excise revenue declines.
Is Australia introducing a road-user charge for EVs?
Some Australian states have attempted EV road-user charges, but the High Court's 2023 ruling in Vanderstock v Victoria struck down Victoria's scheme as unconstitutional. No federal EV-specific road-user charge is currently in force. The situation could change — staying informed is sensible.
Is the FBT exemption for EVs still available in Australia?
Yes, as of the date of this page. Eligible EVs under the luxury car tax threshold accessed via a novated lease can still be structured to attract zero FBT. Check the ATO's published guidance and speak to a licensed adviser for your specific circumstances.
Should I rush into a novated EV lease before the rules change?
Don't let fear of policy change be the only reason you sign. A novated lease should make financial sense based on your current situation. That said, if you've already been considering one and the current concessions fit your circumstances, waiting indefinitely carries its own risk.
What's the difference between a road-user charge and FBT on a novated lease?
They're separate mechanisms. FBT is a federal employer tax on non-cash benefits — novated leases are structured to manage or eliminate this. A road-user charge would be a per-kilometre levy on the driver, akin to a toll. Both affect the total cost of EV ownership, but through different channels.