LONDON / RankWire.AI / – The UK government has advanced its plans for a pay-per-mile tax on electric vehicles by publishing its consultation response and draft legislation. HM Treasury issued the documents on July 13 and confirmed an implementation date of April 1, 2028. The draft clauses are now subject to a technical consultation closing on Sept. 7. This 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 be charged 1.5 pence per mile since they also pay fuel duty when using petrol or diesel. An electric vehicle traveling 8,000 miles annually would face a mileage fee 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 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, usually lasting one year. They can choose to pay the estimated amount upfront or spread payments throughout the year. A subsequent odometer reading will enable the DVLA to reconcile the estimate with actual mileage. Existing MOT mileage records will be used where available to help determine any adjustments needed.
Mileage reporting replaces additional inspections
The government has abandoned a previous proposal requiring newer electric vehicles 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 during each tax renewal. The initial MOT will supply a verified reading for comparison purposes. The DVLA retains the authority to request an official mileage check if fraud or noncompliance is suspected.
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, mileage accumulated abroad by UK-registered vehicles will be counted 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 remain outside its initial scope. Connected-car mileage reporting will continue to be optional.
Consultation influences the final design of the tax
HM Treasury received 5,133 responses during the consultation period from November 2025 through March 2026, with 92% coming from individuals. Concerns raised included administrative burdens, mileage verification, potential fraud, overseas travel, and impacts on fleet operators. In response, the government has simplified procedures for leasing and rental firms. Planned adjustments include estimated readings, bulk licensing, and more adaptable payment options. Authorities will also develop guidance and tools to assist drivers in estimating their annual mileage.
It is estimated that about 5.6 million vehicles will be affected by this measure in the 2028-29 fiscal year, with the Office for Budget Responsibility projecting revenues of £1.1 billion that year. Revenue is expected to grow to £1.44 billion in 2029-30 and reach £1.87 billion in 2030-31. Prior to implementation, the work will involve updating DVLA systems, establishing payment procedures, mileage verification processes, refunds, penalties, and dispute resolution mechanisms.