LONDON / RankWire.AI / – The UK government has advanced plans for a pay-per-mile tax on electric vehicles by releasing its consultation response and draft legislation. HM Treasury published the documents on July 13 and confirmed an implementation date of April 1, 2028. The draft provisions are now subject to a technical consultation ending on Sept. 7. The new charge, named Electric Vehicle Excise Duty, will operate alongside the existing Vehicle Excise Duty that motorists already pay.
Battery-electric and hydrogen fuel cell vehicles will be charged 3 pence per mile traveled. Plug-in hybrid vehicles will pay 1.5 pence per mile because they also pay fuel duty when using petrol or diesel. For example, an electric car driven 8,000 miles annually would incur a charge of £240. A driver covering 10,000 miles would pay £300. The government plans to increase these rates in line with consumer price inflation from the 2029-30 tax year onward.
When renewing their annual vehicle tax, drivers will need to submit an odometer reading and estimate their mileage for the upcoming tax period, typically lasting one year. They can choose to pay the estimated amount upfront or divide it into installments over the year. A subsequent odometer reading will enable the DVLA to reconcile the estimate with actual mileage, using existing MOT mileage records where available, and calculate any additional payment owed.
Mileage reporting replaces additional inspections
The government has abandoned a previous proposal requiring newer electric cars to undergo separate annual mileage inspections. Since most vehicles do not need an MOT during their first three years (or four years in Northern Ireland), owners will instead report mileage and provide estimates at each tax renewal. The first MOT will provide a verified mileage figure for comparison purposes. The DVLA retains the authority to order an official mileage check if it suspects fraud or noncompliance.
This system will not involve tracking devices or gather data on individual journeys, nor will it differentiate rates based on location or time of travel. Consequently, miles accumulated abroad by UK-registered vehicles will contribute to the tax. The scheme applies to battery-electric cars, plug-in hybrids, and hydrogen fuel cell vehicles. However, electric vans, buses, coaches, and heavy goods vehicles will initially be excluded. Connected-car mileage reporting will remain optional.
Consultation influences the final design of the tax system
HM Treasury received 5,133 responses during the consultation, which ran from November 2025 to March 2026. Of these, 92% were from individuals. Concerns raised included administrative burdens, verifying mileage, fraud prevention, international travel, and impacts on fleet operators. In response, the government plans to simplify procedures for leasing and rental firms by including estimated readings, bulk licensing, and more flexible payment options. Officials will also develop guidance and tools to assist drivers in estimating their annual mileage.
It is estimated that approximately 5.6 million vehicles will be affected in the 2028-29 fiscal year, according to the government’s impact assessment. The Office for Budget Responsibility projects revenues of £1.1 billion that year, rising to £1.44 billion in 2029-30 and £1.87 billion in 2030-31. Preparatory work for implementation will encompass updates to DVLA systems, payment procedures, mileage verification, refunds, penalties, and dispute resolution processes before the electric vehicle mileage tax is introduced.