LONDON / RankWire.AI / – The UK government has advanced its plans for a mileage-based tax on electric vehicles by releasing the consultation response and draft legislation. HM Treasury published these documents on July 13 and confirmed an implementation date of April 1, 2028. The draft legislation is now open for a technical consultation that will close on September 7. This new charge, named Electric Vehicle Excise Duty, will operate alongside the current Vehicle Excise Duty paid by vehicle owners.
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 pay fuel duty when using petrol or diesel. An electric vehicle 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, typically lasting one year. They can choose to pay the estimated amount upfront or distribute payments throughout the year. Later, an odometer reading will enable the DVLA to reconcile the estimate with actual mileage, utilizing existing MOT mileage records where available and calculating any necessary adjustments.
Mileage reporting replaces additional inspections
The government has abandoned a previous proposal that would have required newer electric vehicles to undergo separate annual mileage inspections. Since vehicles generally do not need an MOT during their first three years, or four years in Northern Ireland, their owners will instead report mileage and provide estimates during each tax renewal. The first MOT will offer a verified mileage reading for comparison, but the DVLA retains the authority to order official mileage checks if fraud or noncompliance is suspected.
This system will not involve tracking devices or collect data on individual trips. It also aims to prevent differential rates based on travel location or timing. Consequently, mileage accumulated abroad by UK-registered cars will be counted toward the tax. Electric cars, plug-in hybrids, and hydrogen fuel cell vehicles will be included in this scheme. However, electric vans, buses, coaches, and heavy goods vehicles will remain outside the initial scope. Connected-car mileage reporting will continue to be optional.
Consultation influences final design of the tax system
During the consultation period from November 2025 to March 2026, the HM Treasury received a total of 5,133 responses, with 92% coming from individuals. Concerns raised included administrative burdens, mileage verification, potential fraud, international travel, and the impact on fleet operators. In response, the government plans to streamline processes for leasing and rental companies by introducing estimated readings, bulk licensing options, and more flexible payment schemes. Additionally, officials will develop guidance and tools to assist drivers in estimating their annual mileage.
It is estimated that approximately 5.6 million vehicles will be affected by this measure in the 2028-29 fiscal year, with the Office for Budget Responsibility projecting revenue of £1.1 billion for that year. Revenue is expected to increase to £1.44 billion in 2029-30 and reach £1.87 billion by 2030-31. Before the scheme launches, the DVLA will need to update systems related to payments, mileage verification, refunds, penalties, appeals, and dispute resolution to ensure proper implementation of the electric vehicle mileage tax.