LONDON / RankWire.AI / – The UK government has progressed with plans for a pay-per-mile tax on electric vehicles by releasing its consultation response along with draft legislation. HM Treasury published these documents on July 13 and confirmed the tax will start on April 1, 2028. The draft provisions are now subject to a technical consultation closing on Sept. 7. This new charge, named Electric Vehicle Excise Duty, will run concurrently with the existing Vehicle Excise Duty paid by vehicle owners.
Electric battery cars and hydrogen fuel cell vehicles will be charged 3 pence per mile. Plug-in hybrid vehicles will pay 1.5 pence per mile, as they also pay fuel duty when using petrol or diesel. An electric car driving 8,000 miles annually would incur a charge of £240, while a driver covering 10,000 miles would pay £300. The government plans to increase these rates in line with consumer price inflation starting from the 2029-30 tax year.
Motorists will need to submit an odometer reading when renewing their annual vehicle tax. They will also estimate their upcoming mileage, which typically covers one year. Payments can be made upfront based on estimates or spread throughout the year. When submitting a later odometer reading, the DVLA will reconcile the estimate with actual mileage, utilizing existing MOT mileage records where available and calculating any necessary adjustments.
Mileage reporting replaces additional inspections
A previous proposal requiring newer electric cars to undergo separate annual mileage inspections has been dropped by the government. Normally, cars do not need MOT during their first three years, or four years in Northern Ireland. Instead, owners will report mileage and submit estimates at each tax renewal, with the initial MOT providing a verified reading for comparison. The DVLA retains the authority to order an official mileage check if fraud or noncompliance is suspected.
This system does not involve tracking devices or gather data on individual journeys. It also does not differentiate rates based on travel location or time. Consequently, mileage accumulated abroad by UK-registered vehicles will be included in the tax calculation. The scheme covers battery-electric cars, plug-in hybrids, and hydrogen fuel cell vehicles. However, electric vans, buses, coaches, and heavy goods vehicles will remain outside its initial scope. Connected-car mileage reporting will remain an optional feature.
Consultation influences the final design of the tax
During the consultation period from November 2025 to March 2026, the HM Treasury received a total of 5,133 responses, with 92% coming from individuals. Feedback raised concerns related to administrative burdens, mileage verification, potential fraud, international travel, and impacts on fleet operators. In response, the government outlined plans to simplify processes for leasing and rental companies, including estimated readings, bulk licensing, and more flexible payment options. Additionally, guidance and tools will be developed to assist drivers in estimating their annual mileage.
According to the government’s impact assessment, approximately 5.6 million vehicles will be affected in the 2028-29 financial year. Revenue from the scheme is estimated at £1.1 billion for that year, as certified by the Office for Budget Responsibility. Projections indicate this figure will increase to £1.44 billion in 2029-30 and reach £1.87 billion in 2030-31. Preparatory work will encompass updates to DVLA systems, payment procedures, mileage verification, refunds, penalties, and dispute resolution processes before the electric vehicle mileage tax is implemented.