The Chancellor has confirmed that electric-vehicle drivers will start paying 3p per mile from April 2028 under a new scheme called Electric Vehicle Excise Duty, or eVED. It’s the government’s first attempt at replacing the billions lost as fuel duty collapses, and it works in a way that’s far more mundane than the rumour mill suggested earlier this year.
The system sits inside normal road tax. When an EV driver renews their Vehicle Excise Duty each year, they will type in their car’s current mileage, estimate how many miles they expect to drive over the next twelve months, and pay 3p per mile on that estimate. At the next renewal they will submit their car’s updated odometer reading and settle any difference.
According to the Treasury’s consultation, the rate has been set at “around half of the average fuel duty paid by a petrol or diesel driver”, which officials put at roughly 6p per mile today. The Treasury says an EV driver covering eight thousand miles a year would expect to pay around £240, compared with the £480 that the average petrol or diesel driver contributes in fuel duty.
What’s changing here
Fuel duty currently raises £24.4 billion a year. Treasury modelling shows that as EV uptake increases, that figure will fall to around £12 billion by the 2030s. The government has been warned repeatedly that this is a fiscal hole waiting to open. The new charge is designed to fill it while keeping EV ownership attractive.
Rather than build a new system from scratch, the government is bolting the mileage charge onto the DVLA’s existing VED framework. No additional apps, no new accounts and, as the Chancellor was quick to say, no trackers.
Annual mileage checks will come from ordinary MOT tests, which already log odometer readings. Cars younger than three years old will need an extra mileage check at year one and year two, carried out at MOT garages and paid for by the government.
Who pays and who doesn’t
The scheme applies only to electric cars and plug-in hybrids, the latter paying a reduced 1.5p per mile on the assumption that around half their driving will be electric. The Treasury admits plug-in habits vary wildly but rejected a system that tries to separate electric miles from engine miles, calling that “not practical or proportionate”.
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Electric vans, buses, coaches, motorcycles and HGVs are out of scope for now as their transition to electric is far less advanced. Hydrogen fuel cell cars are also excluded, with the government saying it will “keep the treatment of these vehicles under review”.
Drivers receiving disability-related mobility benefits will continue to be exempt from VED but will still pay eVED, as their petrol and diesel equivalents already pay fuel duty.
How the mileage system works
Each year, owners will estimate their mileage and choose whether to pay in one go or by monthly direct debit. Any mismatch between estimated and actual mileage will be reconciled at renewal. Underestimates can be paid as a one-off or spread into the following year. Overestimates become a credit for the next period.
The Treasury expects this to work smoothly for most people but is building in a way for motorists to notify the DVLA if circumstances change mid-year. Job changes, illness or anything else that drastically alters driving patterns will be handled through that process.
One subtle knock-on effect will be in the used-car market. Pre-paid mileage will stay with the vehicle when it is sold, and the government openly says it expects this to be reflected in asking prices. Buyers will be able to check a car’s “mileage position” through DVLA records in the same way they currently check tax and MOT history.
What about fraud
Odometer tampering is already illegal, but the Treasury expects the incentive to rise once mileage is taxed. Its consultation points to research suggesting around 2.3% of UK vehicles show signs of clocking, and it is working with manufacturers on making digital odometers harder to manipulate.
MOT centres will continue to play a key role here, as every recorded mileage becomes part of DVLA’s compliance checks. Enforcement will mirror VED, meaning fines, clamping and impounding for those who ignore the rules.
Replacing lost tax revenue
The government argues that all cars contribute to congestion and road wear, so all drivers should contribute something for the miles they drive. It also argues that letting fuel duty revenues collapse without a replacement would risk either spending cuts or tax rises elsewhere. The consultation frames eVED as the simplest, least intrusive option that still protects the public finances. Whether the public sees it that way is another matter.
The consultation on how eVED should be implemented runs until 18 March 2026, and the Treasury says it will engage with motorists, manufacturers, leasing companies and local authorities before finalising the scheme.
The new system will not please everyone, but it does bring clarity to a question that has been hanging over EV adoption for years. Nobody expected the government to let EV drivers off the hook forever. Now we finally know what comes next.
