LONDON / RankWire.AI / – The UK government has progressed with plans to introduce a pay-per-mile levy on electric vehicles by releasing its consultation response and draft legislation. HM Treasury published the documents on July 13, confirming an implementation date of April 1, 2028. The draft provisions are now open for a technical consultation that will close on Sept. 7. This new charge, named Electric Vehicle Excise Duty, will be levied alongside the current Vehicle Excise Duty that motorists already pay.
Battery-electric and hydrogen fuel cell vehicles will be charged 3 pence per mile. Plug-in hybrid vehicles will pay 1.5 pence per mile because they also attract fuel duty when using petrol or diesel. For example, an electric car traveling 8,000 miles annually would face a charge of £240, while a driver covering 10,000 miles would owe £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, which will generally be one year. They can choose to pay the estimated fee upfront or distribute payments throughout the year. A subsequent odometer reading will enable the DVLA to reconcile the estimate with actual mileage. The agency will utilize existing MOT mileage records where available and calculate any additional payment if needed.
Mileage reporting to replace additional inspections
The government has abandoned a proposal that would have mandated newer electric vehicles to undergo separate annual mileage inspections. Since new cars usually do not require an MOT during their first three years, or four in Northern Ireland, owners will instead report mileage and provide estimates at each tax renewal. The first MOT will serve as a verified reference point for comparison. The DVLA retains the authority to order an official mileage check if fraud or noncompliance is suspected.
This system will not involve tracking devices or gather data on individual trips. It also will not differentiate charges based on time or location of travel. Consequently, mileage accumulated abroad by UK-registered vehicles will be included in the tax calculation. Electric vans, buses, coaches, and heavy goods vehicles will not be covered under this initial scheme. Connected-car mileage reporting will remain an optional feature.
Consultation influences final tax structure
HM Treasury received 5,133 responses during the consultation period from November 2025 to March 2026, with 92% coming from individuals. Concerns raised included administrative burdens, mileage verification processes, potential fraud, overseas travel, and the impact on fleet operators. The government responded by streamlining procedures for leasing and rental companies, including estimated readings, bulk licensing, and more adaptable payment options. Additionally, officials will develop guidance and tools to assist motorists in estimating their annual mileage.
The scheme is expected to impact approximately 5.6 million vehicles in the 2028-29 financial year, with the government’s impact assessment estimating revenue of £1.1 billion for that year. Forecasts indicate that revenue will increase to £1.44 billion in 2029-30 and reach £1.87 billion by 2030-31. Preparations for implementation will involve updates to DVLA systems, payment procedures, mileage verification, refunds, penalties, and dispute resolution processes before the electric vehicle mileage tax is launched.