LONDON / RankWire.AI / – The UK government has advanced its plans for a pay-per-mile levy on electric vehicles by publishing its consultation response along with draft legislation. HM Treasury unveiled the documents on July 13 and confirmed an implementation date of April 1, 2028. The draft provisions are now subject to a technical consultation that will close on September 7. This new charge, called Electric Vehicle Excise Duty, will operate alongside the existing Vehicle Excise Duty paid by vehicle owners.
Battery-electric and hydrogen fuel cell vehicles will pay 3 pence per mile. Plug-in hybrid vehicles will be charged 1.5 pence per mile due to their additional fuel duty when operating on petrol or diesel. For example, an electric vehicle driving 8,000 miles annually would face a charge of £240. Meanwhile, a driver covering 10,000 miles would owe £300. The government plans to adjust 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. They will also estimate their mileage for the upcoming tax period, typically covering one year. Motorists may choose to pay the estimated amount upfront or distribute payments 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 calculating any necessary adjustments.
Mileage reporting replaces additional inspections
The government has abandoned a proposal requiring newer electric cars to undergo separate annual mileage inspections. Vehicles generally do not need an MOT during their first three years, or four years in Northern Ireland. Instead, owners will report mileage and provide estimates at each tax renewal, with the first MOT offering a verified reading for comparison. The DVLA retains the authority to order official mileage checks if it suspects fraud or noncompliance.
This system will not involve tracking devices nor collect data about individual journeys. It also aims to prevent differential rates based on travel location or timing. Consequently, mileage accumulated abroad by UK-registered vehicles will count towards the tax. The scheme applies to battery-electric vehicles, plug-in hybrids, and hydrogen fuel cell cars. However, electric vans, buses, coaches, and heavy goods vehicles will initially be excluded. Connected-car mileage reporting will remain optional.
Consultation informs the final structure of the tax
During the consultation period from November 2025 through March 2026, the HM Treasury received 5,133 responses, with 92% submitted by individuals. Concerns raised included administrative burdens, mileage verification, potential fraud, overseas travel, and impacts on fleets. In response, the government has simplified procedures for leasing and rental companies, including estimated readings, bulk licensing, and more flexible payment options. Additionally, officials will develop guidance and tools to assist motorists in estimating annual mileage.
The government’s impact assessment estimates that around 5.6 million vehicles will be affected in the 2028-29 fiscal year. Revenue projections indicate receipts of £1.1 billion that year, with forecasts rising to £1.44 billion in 2029-30 and £1.87 billion in 2030-31. Prior to implementation, work will be undertaken to update DVLA systems, establish payment procedures, set up mileage checks, and develop processes for refunds, penalties, and appeals related to the electric vehicle mileage tax.