Every Electric Car Driver Overestimating Mileage Would Get Credit, Cash Only for Hardship Over £100

• Draft law would charge battery electric and hydrogen cars 3p a mile and plug-in hybrids 1.5p from 1 April 2028, on a mileage figure the keeper estimates when taxing the car.
• A guess that runs too high would come back as a credit against the next bill, with a cash refund while the keeper still owns the car only on application, for financial hardship and once the credit passes £100.
• Budget 2026 promised a mileage estimator at launch, a voluntary eVED Connect that reads the car’s own data and automated refunds by 2030.

Where Your Money Goes When the Mileage Guess Is Wrong

Tax an electric car after 1 April 2028 and DVLA will ask for two numbers: the odometer reading today and the miles the car will cover in the coming tax period, typically a year. The second number is a guess. The draft law prices it at 3p a mile for a battery electric or hydrogen car and 1.5p a mile for a plug-in hybrid.

Guess 10,000 miles in a battery electric car and the charge is £300. Drive 6,000 and the bill should have been £180. The £120 gap does not go back to the bank account. The draft takes it off the next licence as a negative adjustment, and any part the next bill cannot absorb carries over to the licence after that.

Cash is the exception. The draft gives the Secretary of State for Transport a power to pay a refund, with no duty to, and only if the keeper applies, the Secretary of State is satisfied the keeper is suffering financial hardship, and the credit is more than £100 and at least as large as the refund. At 3p a mile, £100 is an overestimate of 3,334 miles. At 1.5p, the plug-in hybrid rate, it is 6,667 miles. Both figures are Motoring Chronicle arithmetic and ignore any other amount in the credit sum.

All of this is draft legislation. HMRC published it on 13 July 2026 and updated it on 28 October 2026, in the Finance Bill 2026-27 collection of draft legislation. Nothing is law yet. If Parliament passes it, the charge applies to licences taken out on or after 1 April 2028, DVLA runs it, and HMRC’s impact note expects around 5.6 million vehicles to pay in 2028 to 2029. Motoring Chronicle set out the mileage tax on electric cars before the Budget. The draft text and the Budget set out how it is collected and what happens when the estimate is wrong.

How the Charge Is Built and Paid

The eVED charge sits on top of existing vehicle excise duty. The draft adds it to the annual rate for the car. A car that VED law now exempts loses the exemption if it is an eVED vehicle and pays the eVED charge alone. The rates rise from 2029 to 2030 in line with CPI inflation, which HMRC says keeps the tax at its real-terms value.

Here is what a year costs, in Motoring Chronicle arithmetic at the 2028 rates. A battery electric car driven 6,000 miles pays £180, 8,000 miles pays £240 and 12,000 miles pays £360. A plug-in hybrid pays half: £90, £120 and £180. The 1.5p applies to every mile the car is driven, whatever fuel it runs on.

Drivers can pay upfront on the estimate or spread the payment across the year, and the year-end mileage reading triggers a reconciliation. Spreading costs extra. On a 12-month licence paid in more than one instalment, the eVED part of the bill is 105 percent of the charge, so £240 becomes £252, an extra £12. A six-month licence, which the draft makes available for every eVED vehicle, is charged at 110 percent, or 105 percent by direct debit. For half of 8,000 miles that is £132, or £126 by direct debit, against £120.

Mileage is collected at annual MOTs and can be viewed for most cars on GOV.UK, and the government intends to use that data to test whether supplied mileage is consistent and up to date. A car already subject to an MOT will typically face no additional checks. Mileage data is already a target for fraud, as this site’s reporting on faked mileage on used cars shows, and the draft makes tampering with an odometer record without good reason an offence.

What the Draft Does When the Guess Misses in Either Direction

A low guess costs money at the next licence. The draft takes the miles actually driven, subtracts the estimate and multiplies the gap by the per-mile rate, and the answer can be negative. Guess 6,000 miles, drive 9,000, and £90 joins the next bill.

A car that leaves the keeper’s hands brings a second rule. If the car is stolen, destroyed or exported, or sold to someone who does not pay vehicle excise duty on it, the draft entitles the keeper to receive a positive credit amount as a rebate. If the amount is negative, the keeper gets a notice to pay it, and failing to pay is an offence. The penalty is the greater of a level 3 fine and five times the duty chargeable, which the draft calculates as the annual rate plus 8,000 miles at the per-mile rate. For a battery electric car that second part is £240, so five times it is £1,200 before the annual rate is counted.

A sale to an ordinary keeper is not in that rebate section at all. The draft ties the adjustment and the carry-over to the last licence taken out for the vehicle and says nothing about who held it, so read literally, a seller’s unused credit stays with the car. The Budget names selling a car as one case where its automated refunds model should make refunds easier.

The same 8,000 miles appears elsewhere in the draft. It adds 8,000 miles at the per-mile rate to the duty figure behind the penalty for keeping an eVED vehicle unlicensed: £240 for a battery electric car and £120 for a plug-in hybrid. The draft uses it as a penalty basis and does not offer it as a default estimate.

Several details sit in regulations the Secretary of State has yet to write. They cover the assessment date, how a keeper applies for a top-up or refund, and whether an application for a top-up carries a fee. The draft also lets regulations treat an official mileage record as conclusive, which would stop a keeper challenging a bill on the grounds that the car drove a different number of miles. A false or misleading statement in a refund or rebate application is an offence.

What the Budget Added and What Still Has No Date

The Budget on 28 October added four commitments after the consultation, which closed on 18 March 2026. A mileage estimation tool will be available at launch in April 2028, and the government is testing whether benchmarking can help drivers estimate. A voluntary system called eVED Connect will use the car’s built-in connectivity so owners need not report mileage by hand, and it could support the estimate for the coming year. An automated refunds model is due by 2030, making refunds easier and available in more circumstances, such as when a motorist overestimates their mileage or sells their car. Guidance for fleet operators follows later this year.

The gap is in the middle. The refunds promise says by 2030, and the charge starts in April 2028, so the first renewals fall under the credit and hardship rules in the draft unless the model arrives sooner. The Budget gives no earlier date.

The money explains the urgency. The Office for Budget Responsibility certified the Exchequer effect at minus £25 million in 2026 to 2027 and minus £50 million in 2027 to 2028, then plus £1,115 million in 2028 to 2029, £1,450 million in 2029 to 2030, £1,885 million in 2030 to 2031 and £2,285 million in 2031 to 2032. Spread across 5.6 million vehicles, the 2028 to 2029 figure is about £199 a vehicle, Motoring Chronicle arithmetic. The charge is meant to help replace fuel duty revenue lost as drivers switch to electric cars, and a petrol driver pays that duty at the pump with no estimate to get wrong.

The OBR assessed in November 2025 that eVED and related Budget measures would cut electric car sales by around 120,000 between 2025 to 2026 and 2030 to 2031, 2 percent of expected sales. The impact note’s modelling says some owners could be expected to keep petrol and diesel cars longer and others could choose slightly smaller electric cars. Owners without a driveway already pay a 20 percent tax at public chargers, and this adds a mileage charge on top.

How to Avoid Overpaying

Start with the MOT history. Enter the registration at gov.uk/check-mot-history, which lists the mileage recorded at each test. Subtract last year’s reading from this year’s for a baseline, which is the data the government says it will check an estimate against. Write the odometer reading down on the day of renewal, as the year-end reconciliation runs on readings.

Estimate from real miles. A driver who covers 5,000 miles and guesses 8,000 hands over £90 at 3p, which returns only as a credit next year. A plug-in hybrid owner pays the 1.5p on every mile, including the petrol ones.

Pick the payment method to suit the size of your doubt. Paying the full year upfront avoids the 5 percent instalment charge, which is £12 on a £240 bill. An estimate that is out by 2,000 miles costs £60 at 3p and £30 at 1.5p, and that money comes back only as a credit. A steady, predictable mileage suits paying in one go.

Do not try to beat the start date. The draft’s transitional paragraph lets the Secretary of State send a payment notice where licences taken out for periods starting between 1 April 2027 and 31 March 2028 have a combined length above 12 months and one is running on 1 April 2028. The amount is £20 a month for a zero-emission car and £10 for a plug-in hybrid, for each complete month after the start date, payable within 28 days or the licence ceases to have effect.

If a credit builds past £100 and money is tight, the hardship refund is the only cash route in the draft while you keep the car. The application must be truthful, as a false statement is an offence. Watch the Finance Bill 2026-27 and the regulations behind it: the draft can still change, and the top-up fee, the assessment date and the application rules are not yet written.

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