Every Electric Car Driver Faces a New £240 Mileage Tax From April 2028

• A pay-per-mile charge of 3p for every mile driven in a fully electric car, and 1.5p for a plug-in hybrid, starts in April 2028, stacked on top of existing road tax.
• The DVLA will work out what you owe from an annual mileage reading given at tax renewal, not from GPS or a tracking box, and the average electric car driver is expected to pay around £240 a year.
• Fleet and leasing bodies say the charge lands at the worst possible moment for electric car sales and want ministers to rethink the timing before it reaches the statute book.

A New Bill Lands on Every Electric Car Driver’s Road Tax Renewal

Every electric car driver in the UK will open their road tax renewal from April 2028 to find a new charge sitting next to the figure they already pay. The government has confirmed it will introduce an Electric Vehicle Excise Duty, a mileage-based levy that adds 3p for every mile driven in a fully electric car and 1.5p a mile for a plug-in hybrid. It applies on top of standard Vehicle Excise Duty and the Expensive Car Supplement that electric cars started paying in April 2025.

The change follows a consultation that ran from November 2025 to March 2026 and drew more than 5,000 responses from drivers, fleet operators and leasing firms. Ministers have now set out how the charge will actually work, and the answer is less invasive than many feared, but it still represents the first time a British driver has paid tax by the mile rather than by the size of their engine or the value of their car.

How Much You Will Actually Pay

The Treasury has pitched the new charge as roughly half of what a petrol or diesel driver pays in fuel duty each year, which averages around £480. On that basis, a typical electric car driver covering an average annual mileage would pay close to £240 a year once the charge begins, or about £20 a month. Plug-in hybrid drivers pay half that rate per mile, reflecting the fuel duty they already pay at the pump for the petrol portion of their driving.

Drivers who cover more miles than average will pay more. Fleet and leasing data firm Ayvens has calculated that a business contract hire vehicle averaging 14,400 miles a year would face an extra £432 annually once the charge lands, on top of whatever VED band the car already sits in. The Treasury expects the charge to raise around £1.2 billion a year once fully in place, money the government says will help fund more than £7.5 billion in zero-emission transport support planned over the next decade, at the same time as company car tax incentives for electric drivers are being wound down.

How the DVLA Will Work Out Your Bill

There is no tracker, no black box and no record of where or when you drive. Private motorists will give an odometer reading and estimate their mileage for the coming year when they renew their Vehicle Excise Duty, the same moment they already deal with the DVLA every twelve months. That estimate sets the amount paid upfront or in instalments, and the DVLA reconciles it against the real mileage the following year, usually using the reading taken at the MOT.

New electric cars under three years old, which are not yet due their first MOT, were originally going to face a separate mileage inspection to stop drivers under-declaring in the early years. The government dropped that plan after the consultation, so a new EV bought in 2028 will not face an extra check beyond its first MOT. Drivers who want a more accurate bill, rather than an estimate, can choose a voluntary connected-car service that reports mileage directly from the vehicle, though nobody is required to use it. Fleet operators get a simplified central reporting option, and sellers of a car part-way through a tax year can make a top-up payment to settle the account before the vehicle changes hands.

Giving a wrong reading, whether by mistake or on purpose, carries a penalty. The DVLA has not published the exact fine scale for eVED yet, but it is expected to mirror the existing penalties for late or incorrect VED declarations, which can run into hundreds of pounds plus the backdated tax owed.

Who Escapes the Charge, and Who Is Fighting It

Electric vans are exempt, along with buses, motorcycles, coaches and HGVs, though the government has left the door open to bringing commercial vehicles into scope later. No GPS tracking, location-based pricing or a nationwide road-pricing scheme is part of the plan, something the Treasury has explicitly ruled out after years of speculation about pay-as-you-drive road charging.

The industry reaction has not been warm. Toby Poston, chief executive of the British Vehicle Rental and Leasing Association, said the plans were “poorly timed and very problematic to implement,” arguing the charge retrospectively taxes people who bought an electric car on the understanding it would be cheaper to run. Vicky Edmonds, chief executive of EVA England, said the policy “still does not work for drivers” and remains too complicated. Matt Walters of Ayvens called the timing “a premature move” given how much electric cars still cost to buy, pointing to an Office for Budget Responsibility estimate that the policy could mean up to 440,000 fewer electric car registrations over five years. Paul Hollick of the Association of Fleet Professionals wants the charge to avoid “hampering electrification” and is pushing for more industry input on how it rolls out.

Why the Treasury Needs the Money

The pressure behind the new charge comes from a simple problem for the Treasury: fuel duty is disappearing. Every petrol and diesel car that is scrapped and replaced with an electric one removes a driver from the fuel duty system entirely, and official forecasts expect fuel duty receipts to fall toward zero by 2050 as the switch to electric cars continues. Fuel duty currently brings in tens of billions of pounds a year, and without a replacement, that revenue simply stops arriving as the fleet turns over. The Electric Vehicle Excise Duty is the government’s answer: a direct substitute that keeps every driver, whatever they put in the tank or plug into the wall, paying something toward the roads they use.

That logic explains why ministers pushed ahead even as the industry pressure described above mounted. Electric car sales have grown fast enough that the gap in fuel duty income is no longer a distant worry, and the government would rather introduce a mileage charge gradually, with plenty of notice and no GPS tracking, than face a much bigger funding hole further down the line. Whether that reasoning lands well with the drivers who actually pay the bill from April 2028 is a separate question, and one the lobby groups quoted above are still pressing ministers on.

What to Do Before April 2028

The charge does not start for more than a year, so nobody owes anything yet. The most useful step now is to start keeping an accurate record of your annual mileage rather than guessing it at renewal time. Both an overestimate and an underestimate cause problems: overestimating means paying more upfront than you need to, and underestimating risks a bigger reconciliation bill, or a penalty if the DVLA judges the gap was deliberate.

Anyone buying or selling an electric car close to the 2028 start date should also keep a dated record of the odometer reading at the point of sale. The new owner and the previous one will each need to show an accurate split of mileage for that tax year. Company car drivers and fleet managers have more time to prepare and should raise questions with their leasing provider about how mileage will be tracked and reported, above all if cars are due for renewal around the same time the charge begins.

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Sources:

• Fleet World: EV pay-per-mile tax: Consultation opens on introduction of Electric Vehicle Excise Duty
• Electrive: UK confirms mileage-based EV tax from 2028
• Carwow: Government response: pay-per-mile EVED consultation
• Motoring Chronicle: What a Rate Rising to 9 Percent Means for Every Electric Company Car Driver