UK to introduce mileage-based EV tax from 2028

By Emily Parker 15/07/2026 2 min read 2 views

The UK government has confirmed a new mileage-based tax for electric vehicles, set to take effect in April 2028. Under the proposed framework, drivers of battery-electric cars will pay 3 pence per mile, while plug-in hybrids will face a charge of 1.5 pence per mile. This new Electric Vehicle Excise Duty (eVED) will apply in addition to the standard annual Vehicle Excise Duty and is designed to ensure that drivers of electric vehicles contribute to road funding as fuel duty receipts decline towards zero by 2050.

The government has simplified compliance requirements for newer vehicles after a consultation period that drew over 5,000 responses. The original proposal required vehicles under three years old to undergo additional mileage verification checks, as these cars are not yet subject to annual MOT inspections. That mandate has been dropped.

Private motorists will instead provide an odometer reading and an estimated mileage for the coming year when renewing their Vehicle Excise Duty. The Driver and Vehicle Licensing Agency (DVLA) will use this data to calculate an estimated eVED liability. Mileage will later be reconciled against official records. The government also confirmed a voluntary connected-car option, allowing drivers to submit mileage data directly from their vehicle systems, though participation will not be mandatory.

Operators of rental companies and leasing providers have gained simplified reporting options under the new rules. Fleet managers will be allowed to submit estimated mileage figures centrally, rather than relying on individual drivers to provide accurate data for every vehicle. The government notes that this change removes a significant administrative burden identified during the consultation process.

Another concern for fleet operators involved outstanding eVED liabilities when vehicles left the company. The government has addressed this by allowing operators to make top-up payments before vehicles are sold, ensuring liabilities are settled before disposal. This change aims to prevent complications with residual values and remarketing.

The Treasury argues that while drivers of petrol and diesel vehicles contribute to public finances through fuel duty, electric vehicle users currently do not pay a usage-based tax. The response to the consultation stated that there was support for the principle that motorists who drive more should make a greater contribution. More than £7.5 billion in support measures for zero-emission mobility are planned over the next decade, partly funded through the reinvestment of eVED revenues.

While the mechanics of the tax have been refined, the British Vehicle Rental and Leasing Association (BVRLA) remains critical of the policy. The association had previously estimated annual compliance costs of around £260 million for the fleet sector under the original design. It added that the Government has taken some of the roughest edges off the plans.