A new pay-per-mile road tax on electric vehicles is set to cost the average driver around £300 a year, new analysis shows.
Owners of fully electric cars and plug-in hybrids will have to report how far they’ve driven each year to calculate this new tax bill from April 2028.
The plans were first announced under Sir Keir Starmer, and legislation to bring the pay-per-mile road tax into effect has not yet been brought before Parliament.
But Andy Burnham’s new Government remains “committed” to bring in the tax from 2028, The i Paper has learned.
Here is how the plan will work – and how it could affect you.
How the system works now – and why it’s changing
Petrol and diesel drivers already contribute towards road use through fuel duty, which costs drivers around £480 a year per driver on average, according to Treasury figures.
Electric vehicle owners currently pay no equivalent charge, a gap ministers say will only widen as more drivers switch away from petrol and diesel.
The Electric Vehicle Excise Duty (eVED) was announced by the then-chancellor Rachel Reeves at the Autumn Budget in November 2025, alongside a public consultation on how the new mileage charge might work.
Starmer’s Government published its formal response on 13 July, confirming eVED will go ahead from April 2028 as originally planned, though primary legislation has not yet been brought before Parliament.
Since then, Burnham has become Prime Minister, with his first week in office dominated by pledges to ease the cost of living, including a VAT cut on electricity bills and a cap on bus fares.
But asked whether the new administration would keep the tax, a Treasury spokesperson said: “Right now, [electric vehicle] drivers pay no fuel duty, while petrol drivers pay around £480 a year – that’s not fair”.
How will the tax on electric vehicles work?
Rather than fitting trackers to vehicles, the Government will rely on drivers to report their own mileage.
Petrol and diesel drivers already pay a mileage-based charge automatically, since fuel duty is built into the price of every litre at the pump.
Electric cars don’t use fuel, so there’s no equivalent transaction for the Government to tax – meaning drivers will instead need to actively report how far they’ve travelled.
The charge will be set at 3p a mile for fully electric cars, and 1.5p a mile for plug-in hybrids.
At each renewal of their road tax, drivers will submit a reading from their car’s mileage clock and provide an estimate of how many miles they expect to drive over the coming year.
The Driver and Vehicle Licensing Agency (DVLA), which collects road tax, will use that estimate to calculate an annual eVED bill. This will then be checked against the mileage recorded at the driver’s next MOT – the annual safety check required for most cars.
The Government has ruled out offering refunds if drivers don’t travel as much as they estimated. Instead, any difference will be carried forward as credit, while anyone who has driven more will need to make a top-up payment.
As part of the new tax, the Government will also introduce a legal requirement for electric and hybrid cars to have a working mileage clock, along with new offences for tampering with one or supplying devices designed to alter its readings.
What about new cars and large vehicles?
New cars aren’t required to have an MOT until they are three years old, meaning there is no way for the DVLA to verify mileage during that period.
To cover this, the Government’s original proposal was for these cars to attend a separate mileage check at an accredited garage around their first and second anniversary.
However, following concerns raised in the consultation, the Government has dropped plans for separate mileage inspections on cars under three years old.
That means owners of newer electric cars won’t have to book in a special appointment just to verify their mileage – they’ll simply self-report their reading each year, with the first official check happening at their car’s first MOT.
The Government has also made exceptions for large vehicles and leasing companies.
Electric vans, buses, coaches and HGVs will be excluded from eVED entirely when it launches, as the Government says take-up of electric power in these vehicle types is still less advanced than for cars.
Fleets and leasing companies will be offered bulk licensing arrangements and the option to submit estimated mileage centrally, rather than reporting individual vehicles one by one.
How a pay-per-mile tax could affect you
The consultation on the policy revealed concerns on several fronts, from the cost to drivers to the practicalities of enforcing it.
Cost to drivers: The Government estimates that the average electric car driver covers around 8,900 miles a year, working out at about £267 a year at the new 3p-a-mile rate. A lower-mileage driver covering 5,000 miles a year would pay £150, while someone driving 15,000 miles would pay £450. The more you drive, the more you pay.
Impact on uptake: The Office for Budget Responsibility, the Government’s independent forecaster, has said the tax could reduce electric vehicle sales by around 120,000 vehicles between 2025-26 and 2030-31. Research by Venson Automotive Solutions found 62 per cent of drivers said the tax would put them off switching to an electric car. Simon Staton, the firm’s client management director, said this “should ring alarm bells for policymakers.”
Impact on MOT garages: Garages already record a car’s mileage at every MOT. But under the new law, that reading will directly decide how much tax a driver owes, putting garages at the centre of spotting anomalies or possible tampering. Nick Connor, chief executive of the Institute of the Motor Industry, warned that “diagnostic capability varies significantly across the MOT network,” adding: “Reading a dashboard [mileage clock] is one thing; investigating a disputed, missing or potentially tampered mileage reading on an electric vehicle is quite another.”
What happens next?
The Government has confirmed it intends to introduce eVED from April 2028, with primary legislation still to be brought before Parliament.
Further updates on refund arrangements for events such as a change of car ownership, along with plans for an opt-in system allowing cars to report mileage automatically, are expected by the end of this year.
Until then, the two years’ notice built into the scheme means no driver will need to start reporting mileage before their vehicle tax next comes up for renewal after April 2028.
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