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, whether Australia might follow, and how novated leasing fits in.
The UK government has confirmed it will introduce a mileage-based Electric Vehicle Excise Duty (eVED) from April 2028, pressing ahead despite significant pushback from the electric car industry. According to The Driven [Source 1], the scheme will take effect largely in its original form — meaning EV drivers in the UK will pay a per-kilometre charge where they previously paid nothing.
This isn't an Australian policy announcement. But it's worth paying attention to, because the UK and Australia often share policy instincts — especially around closing revenue gaps left when fuel excise receipts shrink as petrol cars disappear.
What this means for novated lease customers
Right now in Australia, EVs under the LCT threshold remain exempt from Fringe Benefits Tax under the Treasury Laws Amendment (Electric Car Discount) Act — a genuine, legislated benefit that makes novated leasing an attractive way to finance an EV. That hasn't changed. But the UK story is a useful reminder that governments do eventually find ways to recoup lost road-funding revenue from EV drivers.
If you're weighing up an EV on a novated lease today, the current FBT exemption is locked in for existing agreements — which is an argument for acting while the settings are clear rather than waiting to see how Australian policy evolves. The UK's move also signals that 'free ride' assumptions about EV ownership costs deserve scrutiny wherever you live.
For Australian PAYG employees using a novated lease, the structure still offers potential savings on running costs, GST, and income tax — independent of any future road-user charge debate locally. But it's not a reason to ignore how the broader EV tax landscape is shifting globally.
Common questions
Is Australia introducing a mileage-based EV tax?
Not at the federal level as of mid-2026. Some Australian states have trialled road-user charges for EVs, but there is no confirmed national mileage-based tax equivalent to the UK's eVED. The UK announcement does not directly affect Australian drivers.
Does the UK EV tax affect my novated lease in Australia?
No — your novated lease is governed by Australian tax law, not UK policy. The FBT exemption for eligible EVs under the LCT threshold remains in place under current Australian legislation.
Could Australia follow the UK's lead on EV road-user charges?
It's a genuine policy conversation in Australia, but nothing has been legislated at the federal level. Watching how the UK rollout lands — including industry and consumer pushback — will likely inform any Australian debate.
Should I lock in an EV novated lease now before things change?
The current FBT exemption is a real, time-limited advantage that makes the numbers work differently than a standard car loan or cash purchase. Whether that alone justifies acting now depends on your personal situation — worth a direct conversation rather than a guess.
What is eVED?
Electric Vehicle Excise Duty — the UK's proposed mileage-based charge for EV drivers, confirmed to take effect from April 2028 according to The Driven [Source 1]. It replaces the previous zero-rate treatment EV drivers enjoyed under the existing VED system.