LONDON / RankWire.AI / – The UK government has advanced its plans for a per-mile tax on electric vehicles by publishing both its consultation response and draft legislative proposals. HM Treasury released these documents on July 13, confirming an implementation date of April 1, 2028. The draft clauses are now open for a technical consultation that will close on September 7. This new charge, named Electric Vehicle Excise Duty, will operate alongside the existing Vehicle Excise Duty paid by drivers.
Electric battery cars and hydrogen fuel cell vehicles will be charged 3 pence for each mile driven. Plug-in hybrid vehicles will be taxed at 1.5 pence per mile, as they also pay fuel duty when using petrol or diesel. An electric car traveling 8,000 miles annually would incur a mileage fee of £240, whereas 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.
When renewing their annual vehicle tax, drivers will need to provide an odometer reading and estimate their anticipated mileage for the upcoming tax period, which will typically span one year. Motorists can choose to pay the estimated amount upfront or opt for installment payments throughout the year. Later odometer readings will enable the DVLA to reconcile estimates with actual mileage, utilizing existing MOT mileage records where applicable, and to calculate any additional payments due.
Mileage reporting replaces additional inspections
The government has abandoned a previous proposal requiring newer electric cars to undergo separate annual mileage inspections. Since vehicles are generally not required to have 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 initial MOT will offer a verified mileage reading for comparison purposes. The DVLA can still mandate an official mileage check if there is reasonable suspicion of fraud or noncompliance.
This system will not rely on tracking devices or gather data on individual trips. It also aims to prevent differential rates based on location or time of travel. Consequently, mileage accrued abroad by UK-registered vehicles will count towards the tax. The scheme will include battery-electric cars, plug-in hybrids, and hydrogen fuel cell vehicles. However, electric vans, buses, coaches, and heavy goods vehicles will initially remain outside its scope. Mileage reporting via connected cars will remain optional.
Consultation informs 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. Concerns raised included administrative burdens, mileage verification, potential fraud, international travel, and impacts on fleet operators. In response, the government has simplified procedures for leasing and rental firms. Future measures will include estimated readings, bulk licensing, and more flexible payment options. Additionally, officials will develop guidance and tools to assist drivers in estimating their yearly mileage.
The government’s impact assessment estimates that approximately 5.6 million vehicles will be affected in the 2028-29 fiscal year. Revenue projections indicate that the scheme will generate £1.1 billion in that year, as certified by the Office for Budget Responsibility. Revenues are expected to increase to £1.44 billion in 2029-30 and reach £1.87 billion by 2030-31. Prior to the introduction of the electric vehicle mileage tax, work will be carried out to update DVLA systems, establish payment procedures, implement mileage checks, and set up processes for refunds, penalties, and appeals.