LONDON / RankWire.AI / – The UK government has advanced plans for a pay-per-mile tax on electric cars by releasing 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 provisions are now open for a technical consultation that will close on Sept. 7. The fee, named Electric Vehicle Excise Duty, will run alongside the existing Vehicle Excise Duty paid by drivers.
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 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 owe £300. The government plans to adjust the rates with consumer price inflation starting from the 2029-30 tax year.
Motorists will need to provide an odometer reading when renewing their annual vehicle tax. They will also estimate their mileage for the upcoming tax period, typically one year. Payments can be made upfront based on the estimate or spread throughout the year. When a new odometer reading is recorded, the DVLA can 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 vehicles to undergo separate annual mileage inspections has been dropped. Generally, cars do not need an MOT during their first three years, or four years in Northern Ireland. Instead, their owners will report mileage and provide estimates at each tax renewal. The first MOT will serve as a verified reading for comparison. The DVLA can still mandate an official mileage check if fraud or noncompliance is suspected.
This system will not involve tracking devices or collect data on individual trips. It also will not charge different rates based on location or timing of travel. Consequently, mileage accumulated abroad by UK-registered vehicles will count toward the tax. The scheme applies to battery-electric cars, plug-in hybrids, and hydrogen fuel cell vehicles. Electric vans, buses, coaches, and heavy goods vehicles will remain outside the initial scope. Connected-car mileage reporting will continue to be optional.
Consultation informs final design of the tax
HM Treasury received 5,133 responses during the consultation period, which ran from November 2025 through March 2026. About 92% of these responses were from individuals. Concerns raised included administrative burdens, mileage verification, fraud prevention, overseas travel, and potential impacts on fleet operators. In response, the government has simplified arrangements for leasing and rental companies. Planned measures include estimated readings, bulk licensing, and more flexible payment options. Officials will also develop guidance and tools to assist drivers in estimating their annual mileage.
The new measure will impact approximately 5.6 million vehicles in the 2028-29 fiscal year, according to the government’s impact assessment. The Office for Budget Responsibility estimates revenue of £1.1 billion for that year. Projections also indicate revenue could increase to £1.44 billion in 2029-30 and reach £1.87 billion by 2030-31. Before the electric vehicle mileage tax is implemented, work will be carried out to update DVLA systems, establish payment procedures, define mileage verification processes, and set policies for refunds, penalties, and dispute resolution.