The New Electric Car Mileage Tax Has Five Catches Drivers Were Not Told About

The Treasury published its formal response to the electric Vehicle Excise Duty consultation this month, confirming the mileage tax will start in April 2028 at 3p a mile for fully electric cars and 1.5p a mile for plug-in hybrids. More than 5,100 people and organisations responded to the consultation, and the 39-page government reply sets out, for the first time, exactly how refunds, top-ups and edge cases will work. Buried in the detail are several catches that go well beyond the headline rate most drivers have already heard about.

No automatic refund when your car is stolen, scrapped or sold

The government confirms in its response that eVED will not support automatic refunds when it launches in 2028. If your electric car is stolen, scrapped, written off or sold with mileage still paid for, the credit does not come back to you automatically. The document states plainly that building automated refunds into DVLA’s legacy systems is “significant and complex work” that will not be ready for launch, and that further scenarios “will be announced by the end of the year.”

For a car that changes hands, any pre-paid mileage credit transfers with the vehicle rather than being cashed out to the seller. The government’s own worked example shows how this plays out when a car is stolen: a driver who estimated 6,000 miles and paid £180 upfront, then had the car stolen three months later, gets back £135 in a pro-rata refund, but only by applying. There is no mention of the DVLA proactively identifying stolen or scrapped vehicles and issuing money owed without a claim being filed.

You have to prove financial hardship to get money back early

Outside of theft, scrapping or a sale, the only route to an early cash refund is a specific hardship test. The rules allow a refund if three conditions are all met: the amount owed is above £100, the applicant has had an unforeseen change in financial circumstances, and the applicant declares they are at risk of financial hardship. Drivers will not need to supply evidence for this, they will self-certify through a short DVLA online form. Anyone who overpays but does not meet that bar simply carries the credit forward into next year’s licence at whatever the eVED rate happens to be by then, and rates rise with CPI inflation from 2029-30 onward.

Miles driven abroad are taxed too

Respondents to the consultation argued it would be unfair to charge UK road tax on mileage driven outside the UK. The government rejected that argument on privacy grounds, stating it does not want a system that tracks where a car has been driven in order to strip out foreign mileage. Treasury officials estimate overseas driving makes up roughly 2% of total mileage for the average car, so the practical cost is small for most drivers, but anyone doing regular continental trips, hauliers, second-home owners, will be paying UK mileage tax on miles driven on French autoroutes and German autobahns with no exemption route at all.

Plug-in hybrid owners could be taxed twice

Plug-in hybrid drivers already pay fuel duty on the petrol or diesel their car burns. From 2028 they will also pay 1.5p a mile in eVED on every mile driven, whether in electric or petrol mode. Several respondents flagged this as double taxation, above all for drivers who mostly run their PHEV on petrol as they cannot charge at home. The government’s answer is that separating out electric-mode mileage from petrol-mode mileage would require intrusive monitoring it is not prepared to introduce, so the flat rate stays regardless of how the car is actually driven.

New criminal offences for tampering with your own odometer

As the whole system runs on self-reported mileage checked against MOT readings, the government is legislating for new criminal offences covering odometer tampering and the supply of devices used to alter a reading. DVSA, DVLA and the police will also gain the power to direct any driver to bring their car to a specified location for an inspection where fraud is suspected, whether or not that vehicle is due an MOT. The government says it does not expect the power to be used often, pointing to built-in checks such as MOT readings and algorithms that flag mileage entries which fail to rise consistently over time.

Fleets get a simpler system than private owners

Compare the private motorist’s position with what large fleet and leasing companies negotiated in the same consultation. Fleets will be allowed to submit estimated mileage readings rather than actual odometer readings, license and pay for entire fleets in bulk rather than vehicle by vehicle, and settle any outstanding eVED balance with a single top-up payment before a car is sold on. The government agreed to this after fleet operators argued that a vehicle-by-vehicle system would be unworkable at scale.

Private owners get none of that flexibility. A single driver selling a single car still has to settle their own mileage credit manually before completing a sale, still has to self-certify hardship for an early refund, and still faces the same annual estimate-and-reconcile cycle that fleets have been allowed to simplify. The government’s own document acknowledges fleets asked for “a clean break for the new owner” on liability transfer and got a version of it, a request individual sellers raised too but without the same result.

The government has also confirmed it will develop a voluntary connected-data system using a car’s built-in 4G or 5G link to report mileage automatically, which would remove much of this admin for drivers willing to share that data. Details of how that will work, and what data beyond mileage it might collect, are due by the end of 2026, so drivers thinking about signing up will have to wait for the fine print before deciding if the trade-off is worth it.

How to Fight Back

You have time to prepare before 2028, and the way you estimate your mileage at the first renewal will set your baseline payments, so it is worth getting that figure right rather than guessing low to save money upfront. Underestimating means a bigger balancing payment later at whatever the prevailing rate is by then.

If your circumstances change mid-year, tell DVLA and top up straight away rather than waiting for the annual reconciliation. The system lets you increase your declared mileage at any point and pay the difference at the rate in force when you do it, which avoids a large lump sum at renewal.

Selling an EV before 2028? Ask your solicitor or the DVLA’s Vehicle Enquiry Screen to confirm whether any mileage credit is attached to the car before you agree a price, and factor that value into the sale rather than losing it. The government expects buyers and sellers to negotiate the credit into the sale price themselves rather than DVLA settling it automatically.

If your car is stolen, scrapped or written off, apply for your pro-rata refund straight away rather than assuming it will arrive on its own. Keep your police crime reference number and insurer paperwork to hand, as the DVLA can ask for evidence when a claim falls outside the standard scenarios set out in its guidance.

Drivers who regularly cross the Channel or drive in Ireland should factor UK mileage tax into the true cost of continental trips from 2028, as there is no deduction for foreign mileage under the current design. Keep fuel and toll receipts as a rough record of foreign mileage in case the government revisits this in a future review.

For more on how EV ownership costs are changing this year, see our coverage of public charging VAT rules and the wider package of Budget 2025 measures supporting EV uptake.

Sources:

• HM Treasury, “The introduction of Electric Vehicle Excise Duty (eVED): Consultation Response” (July 2026): https://assets.publishing.service.gov.uk/media/6a5117eda4890e65cce64d2f/eVED_Government_Consultation_Response.pdf