The government has confirmed it is pushing ahead with plans to introduce a new pay-per-mile tax on electric vehicles from April 2028, which would be one of the biggest changes to car taxes since the shift to electric vehicles began.
The new electric vehicle excise duty (eVED) system will allow drivers to pay a mileage-based charge alongside the current road tax system, replacing some of the fuel tax revenue lost as more motorists switch from petrol and diesel cars.
Following a public consultation that received more than 5,000 responses, ministers also confirmed several changes to make the scheme easier for drivers and businesses.
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How will the new mileage tax work?
Instead of using GPS tracking or telematics, drivers will be asked to provide annual odometer readings when renewing their vehicle tax.
The government says the approach protects motorists’ privacy by recording only how many miles a car is driven, not where, when or how those trips were made.
The scheme is expected to apply to both all-electric vehicles and most hybrid models, with electric vans remaining exempt.
The mileage charge is expected to be set at around half the equivalent fuel duty paid by petrol drivers: 3p per mile for electric vehicles and 1.5p per mile for plug-in hybrids. The government estimates the new tax will raise around £1.2 billion a year.
What changed after the consultation?
The consultation highlighted concerns about additional bureaucracy, particularly in relation to new vehicles and company fleets.
In response, the government made several significant changes:
- New electric vehicles less than three years old will not require additional mileage checks before their first service.
- Fleet operators and leasing companies will have simplified reporting rules.
- In some cases, businesses will be able to use estimated mileage.
- Mass licensing mechanisms and more flexible payment options will also be introduced.
The government says the changes will make the system “fair, proportionate and sustainable” while reducing unnecessary administration.
What does it mean for electric vehicle owners?
Although the final legislation has not yet been passed, the responses to the consultation give motorists a much clearer idea of what to expect.
Operating an electric car will become more expensive
One of the biggest financial benefits of owning an electric car is the lower daily tax bill compared to petrol and diesel cars.
From 2028, this gap will narrow as drivers begin to pay mileage-based fees.
However, the government insists that electric cars should generally remain cheaper to run than equivalent petrol or diesel cars.
Annual document flow will increase
For many drivers, VED renewal is now a simple process.
Under the new system, you’ll also be required to submit your odometer reading annually, which adds another step to the renewal process.
Buyers of used electric vehicles need to pay more attention
Mileage records will become even more important when buying or selling a used electric vehicle.
The government says changes in ownership will need to be accurately reflected to ensure the correct driver is paid for the miles driven.
Keeping copies of mileage records at the point of sale can help avoid future disputes.
Incorrect mileage may result in fines
The consultation response also sets out sanctions for motorists who do not provide mileage data or deliberately provide incorrect information.
Although this information is intended to help prevent fraud, you should expect penalties for inaccurate returns.
What doesn’t change?
One of the biggest issues raised during the consultation was whether the government would introduce vehicle tracking. Now this is out of the question.
The new system will not include:
- GPS trip tracking
- Fees depending on where and when you travel
- Nationwide Road Pricing Scheme
- Always connected device installed in your car
Instead, the preferred system relies solely on annual odometer readings.
Industry welcomes change, but concerns remain
Industry bodies have generally welcomed the government’s decision to simplify the scheme, but have raised some questions.
UK Electric Vehicles chief executive Tanya Sinclair said removing mandatory mileage checks for cars under three years old removes an unnecessary burden on both private motorists and fleet operators, while calling for clearer communication of the government’s wider electric vehicle strategy.
Meanwhile, BVRLA chief executive Toby Poston said ministers had “taken some of the rough edges” off the proposals, recognizing the needs of fleet operators. However, he warned that the increasing cost of owning an electric car could make the UK’s transition to zero-emission vehicles more difficult.
Vicky Edmonds, chief executive of EVA England, said the policy was not working for drivers.
She explained: “The Government has made one welcome change to new electric vehicles, but the wider scheme remains too complex, risks leaving people out of pocket and doesn’t give drivers the confidence they need.
“At such a crucial moment in the transition to electric, ministers must make the system simpler, fairer and clearer, rather than push ahead with policies whose fundamental flaws remain unresolved. This now puts pressure on a review of public charging that must pave the way for affordable charging, otherwise the transition simply won’t work for drivers.”
What happens next?
The pay-per-mile tax is scheduled to be implemented in April 2028, although additional legislation and detailed guidance will be released before then.
For millions of current and future EV owners, the biggest change will be simply remembering to provide annual mileage information when renewing your vehicle tax.
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