The UK’s plan to tax electric cars is landing with a thud. Specifically, it is threatening the affordability ladder for lower-paid drivers. A new policy known as eVED could effectively shut out these workers from salary sacrifice schemes. Those schemes have become the primary gateway for ordinary employees to own zero-emission vehicles.
Here is why the government’s math might fail in practice.
The Mechanics of Electric Vehicle Excise Duty
Announced in last year’s Autumn Budget. Effective April 2028.
Electric Vehicle Excise Duty introduces a mileage-based charge. Pure electric vehicles will cost 3p per mile. Plug-in hybrids? 1.5p. This replaces fuel duty, which the Treasury predicts will vanish by the 203s as internal combustion engines retire.
Fleets are nervous. They handle most new registrations. Now they face administrative chaos. The exact costs are still blurry. That uncertainty makes long-term planning nearly impossible.
Caroline Sandall-Mansergh from Alphabet GB puts it plainly. Fleet managers understand the need for tax reform. Almost everyone already drives EVs or PHEVs through work. So, no panic there. But pass the eVED costs onto drivers, and things get messy.
“There are growing concerns about… unintended consequences for salary-sacrifice schemes.”
How Salary Sacrifice Works (And Why It Breaks)
Think of salary sacrifice as a trade-off. You give up some pre-tax pay. Your employer leases the car for you. It often beats private leasing on price. Plus, if the car emits 75g CO2/km or less, benefit-in-kind tax stays low.
It is cheap. It is popular. It works.
Look at the data from the British Vehicle Rental and Leising Association (BVRLA). In Q4 2022, there were 42,616 salary sacrifice cars. Fast forward to Q4 2025. That number jumps to 226,633. Five times the volume.
And because of those tax breaks, 98% of those deliveries are green.
But there is a hard floor. The law says your post-sacrifice salary cannot drop below the National Minimum Wage.
Add eVED on top of the rental cost? Suddenly, that floor looks higher. For low-wage workers, the math stops working. The car becomes too expensive relative to their base pay. They get squeezed out. Or perhaps their employer just says no.
In rare cases, this mid-contract shock could hit in April 2026.
The Real Cost Is Uncertainty
Most people sign these deals for stability. They want to know what goes out of their paycheck each month. eVED shatters that promise.
Sandall-Mansergh notes that drivers hate ambiguity. Even if the extra cost is small, the lack of clarity repels people.
“You sign up,” she says, “and there’s a flag waving that says we might charge you later.”
Does it matter if you only drive a few miles a year? Technically, the poundage might be tiny. But perception is reality. The anxiety influences decisions. More so than the actual money involved.
The government focused on revenue. They missed the behavior.
Low-wage drivers will look at the risk and walk away. Not because the charge is high, but because it is unpredictable. And in the market for affordable green transport, that uncertainty is enough to kill a deal.
