LONDON / RankWire.AI / – The UK government has advanced its plans for a mileage-based tax on electric vehicles by publishing its consultation response and draft legislation. HM Treasury made the documents available on July 13 and confirmed an implementation date of April 1, 2028. The draft provisions now undergo a technical consultation that will close on Sept. 7. The new charge, named Electric Vehicle Excise Duty, will operate alongside the current Vehicle Excise Duty that motorists already pay.
Electric battery cars and hydrogen fuel cell vehicles will be charged 3 pence per mile. Plug-in hybrid vehicles will be charged 1.5 pence per mile because they also pay fuel duty when operating on petrol or diesel. An electric car traveling 8,000 miles annually would face a mileage fee of £240. 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.
When renewing their annual vehicle tax, drivers will need to submit an odometer reading and estimate their mileage for the upcoming tax period, typically covering one year. Motorists can opt to pay the estimated amount upfront or spread payments throughout the year. Later, a revised 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 payments needed for adjustments.
Mileage reporting replaces additional inspections
The government has withdrawn a previous proposal that would have mandated newer electric cars to attend separate annual mileage inspections. Generally, vehicles do not require 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 providing a verified reading for comparison. The DVLA can still order official mileage checks if there is reasonable suspicion of fraud or noncompliance.
This system will not involve tracking devices or gather data on individual journeys. It will also not differentiate rates based on location or time 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. However, electric vans, buses, coaches, and heavy goods vehicles will remain outside its initial scope. Connected-car mileage reporting will stay optional.
Consultation influences final design of the tax system
HM Treasury received 5,133 responses during the consultation period, which ran from November 2025 through March 2026. Of these, 92% were from individual respondents. Concerns raised included administrative burdens, mileage verification, potential fraud, overseas travel, and the impact on fleets. In response, the government has simplified procedures for leasing and rental companies. Planned adjustments 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 legislation will impact approximately 5.6 million vehicles in the 2028-29 fiscal year, based on the government’s impact assessment. The Office for Budget Responsibility has certified estimates projecting revenue of £1.1 billion in that year. Revenue is expected to grow 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 undertaken on DVLA systems, payment procedures, mileage verification, refunds, penalties, and dispute mechanisms.