The Government has confirmed that a new pay-per-mile scheme for electric vehicles will be introduced in April 2028.
The news follows a lengthy consultation period, and will see drivers of electric cars required to pay 3p per mile, while owners of plug-in hybrid models will pay a lower rate of 1.5p per mile.
Both stand at less than the equivalent 6p per mile that drivers of petrol and diesel cars pay in fuel duty.
The Government says that the new eVED system will be calculated through the use of driver mileage estimates and an upfront charge paid based on that figure. Drivers will also be able to spread the cost through monthly payments, much like regular VED.
Motorists will then submit an actual mileage reading at the end of the year and this will be backed up by a mileage reading at the car's annual MOT or, for new cars, around the second or third registration anniversary.
At the end of the year, drivers will see their balance and either pay any outstanding amount or spread this cost through the following 12-month period.
For new electric cars, there will be the option to combine eVED mileage into the on-the-road pricing of a vehicle, or drivers can sort this out independently.
However, since taxing drivers based on when and where they drive has been ruled out, EV owners also face paying eVED when travelling abroad.
While not a policy for now, the Government said it 'welcomes' an investigation into on-board telematics data which would relay mileage in real time.
However, Vicky Edmonds from Electric Vehicle Association England, said that the move 'still does not work for drivers'.
The Government has made one welcome change for newer EVs, but the wider scheme remains too complex, risks leaving people out of pocket and fails to give drivers the confidence they need.
"At such a crucial point in the switch to electric, ministers should be making the system simpler, fairer and easier to understand, not pressing ahead with a policy whose key faults remain unresolved."