Electric and plug-in hybrid car drivers start paying a mileage charge at their first road tax renewal after April 2028, on top of the annual tax itself. HMRC updated its Electric Vehicle Excise Duty (eVED) policy paper at the Budget on 28 October 2026, and two points about it are easy to misread.
This explainer covers the electric car pay per mile tax rates, how your miles are counted and what’s still undecided.
What Is the Electric Car Pay Per Mile Tax?
Electric Vehicle Excise Duty (eVED) is a per-mile charge that sits within Vehicle Excise Duty (VED), the annual vehicle tax also known as road tax. From 1 April 2028, fully electric and hydrogen fuel cell cars pay 3p a mile, and plug-in hybrids pay 1.5p.
It’s collected by the Driver and Vehicle Licensing Agency (DVLA) through the existing VED system.
Which Cars Are Covered?
Only cars are in scope, at two rates confirmed in the government’s consultation response:
- 3p a mile: fully electric cars and hydrogen fuel cell cars.
- 5p a mile: plug-in hybrids (PHEVs), including range-extender models.
- Not covered at launch: electric vans, buses, coaches and lorries.
Petrol, diesel and standard self-charging hybrid cars aren’t in scope, since fuel duty already applies to the petrol and diesel their drivers buy. HMRC’s own estimate is that about 5.6 million cars fall within the charge in its first year.
Does eVED Track Where You Drive?
No, it counts miles, not journeys.
At each VED renewal you give your odometer reading, which is the car’s mileage counter, and estimate how far you expect to drive over the next year. DVLA works out what you owe from that estimate, and you can top it up during the year if you end up driving more.
Your estimate is then checked against the mileage recorded at your MOT, the annual roadworthiness test most cars need from three years old. Cars younger than that (four years in Northern Ireland) face no routine extra checks, with reconciliation at their first MOT, according to the government’s consultation response.
Charging by location has been ruled out to protect privacy, and the original consultation said cars don’t need trackers fitted. Because the charge follows the odometer, miles driven abroad in a UK-registered car count too.
You can already see the mileage logged at each test on GOV.UK’s MOT history checker.
There’s one optional extra. Budget 2026 announced eVED Connect, an opt-in service that lets a car’s built-in connectivity report mileage so you don’t have to type it in. Nobody has to use it, and no launch date has been set.
Was eVED Announced at the October Budget?
Not for the first time. eVED was first set out at Budget 2025 on 26 November 2025, followed by a public consultation that closed on 18 March 2026.
A government response followed on 13 July 2026, keeping the April 2028 start and both rates. Budget 2026 on 28 October 2026 restated the plan and added detail on how it’s run, with no change to the rates or the start date.
Does It Replace the Road Tax You Pay Now?
No, it’s an extra layer.
Electric cars have paid VED since 1 April 2025, when their exemption ended. Under the draft eVED legislation, an eVED car is charged its usual annual VED rate plus the mileage charge. If the car would otherwise be exempt from VED, only the mileage charge applies.
Not sure which VED rate or supplement applies to your car today? The car tax bands guide sets out the current bands, including the expensive car supplement threshold for electric cars.
What Could It Cost You?
Your bill depends almost entirely on your annual mileage. These illustrative figures show how the 3p per mile EV tax adds up, using starting rates for 2028 to 2029 before any inflation rises.
Worked example: an electric car covering 8,000 miles a year
Priya renews her electric car’s tax in May 2028 and estimates 8,000 miles. At 3p a mile, her eVED comes to £240 for the year, on top of her usual VED.
Had she estimated 6,000 miles, it’d be £180, and 10,000 miles would mean £300. The plug-in hybrid per mile charge is half that, so 8,000 miles in a PHEV comes to £120.
If her MOT readings later show she drove 8,600 miles, she’d typically owe the extra 600 miles at the rate then in force, about £18 at the starting rate. Drive less than you estimated and unused credit normally carries forward.
Paying monthly by Direct Debit may cost slightly more, as the government’s own examples include a 5% surcharge.
What’s Still Being Decided?
Several pieces of the electric car road tax changes aren’t settled yet:
- Fleets and leasing: fleets can send central mileage estimates, usually the contract allowance, but refunds when a car changes keeper are still being worked out. Budget 2026 promised fleet guidance later this year.
- Inflation: rates rise with the Consumer Prices Index (CPI) from 2029 to 2030 onwards, so 3p is a starting figure rather than a fixed one.
- Refunds: an automated refunds model, covering overestimates and car sales, is due by 2030.
If you drive a company car or lease through salary sacrifice, the electric car company car tax guide covers the separate benefit-in-kind charge.
What to Do Before April 2028
Nothing needs doing yet, with the pay per mile road tax still more than a year away.
It’s worth looking up your MOT mileage history now, so you know your typical yearly miles before your first estimate. Leasing drivers may want to ask their provider whether the charge is passed on to them.
If you’re employed and use your own electric car for work, those miles count towards eVED like any others.
That doesn’t change your mileage allowance relief, because the relief is worked out from a fixed rate per business mile, not from what the car actually costs you.
It also means eVED can’t be claimed on top. The mileage allowance relief guide explains the rules, and the mileage tax relief calculator gives a quick estimate of your tax refund.
Key Takeaways
- eVED starts on 1 April 2028, charging electric cars 3p a mile and plug-in hybrids 1.5p.
- It’s charged on top of your usual VED, not instead of it.
- Mileage comes from your odometer reading and MOT records, with no tracker and no charging by location.
- It was first set out at Budget 2025 and confirmed again at Budget 2026.
- At 8,000 miles a year, an electric car would pay about £240 at the starting rate.
- Fleet and leasing arrangements are still being finalised, and the per-mile rates are linked to CPI inflation from 2029 to 2030.
Written by:
Tax Rebate Services Editorial Team
Reviewed by:
Tony Shanks
,
qualified Taxation Technician (ATT)
Last updated:
This article provides general information and is correct as at the date shown. It isn't personalised tax advice — for help with your own circumstances, speak to a qualified adviser or HMRC.
