A new mileage-based charge overseen by the DVLA will add an average of £300 a year for electric vehicle drivers when it is introduced in April 2028, according to new calculations from Octopus Electric Vehicles.
The charge, known as eVED or Electric Vehicle Excise Duty, will apply to electric and plug-in hybrid cars. It was confirmed in the Budget delivered by John Healey, with details largely overshadowed by more prominent announcements on energy and taxation.
What the New Charge Means for Drivers
There are approximately 2 million zero-emission Battery Electric Vehicles on UK roads, according to the RAC, with a further 1 million plug-in hybrids. The RAC Foundation has established that average mileage for EV drivers stands at around 10,000 miles per year, with hybrid car drivers covering only slightly fewer miles.
For a typical EV driver, the new charge will amount to £300 a year, on top of the £200 standard rate road tax that all drivers are required to pay. Even drivers covering relatively modest distances of 5,000 miles a year in an EV would face an additional £150 annually under the new system, according to Octopus's latest estimates. Hybrid drivers would pay less under the tax.
How the System Will Work
Drivers will need to estimate their annual mileage to calculate how much eVED they owe, separate official documents confirm. The government outlined plans last year to phase out the sale of new petrol and diesel cars from 2030, and the new tax is designed to address the shortfall in revenue as more motorists switch to electric vehicles.
Last year, fuel duty generated £24 billion, surpassing the £21 billion allocated to the police. To plug this gap, the government drew up proposals in the 2025 Budget to introduce a 3p per mile charge from 2028 for battery electric vehicles, and a 1.5p per mile charge for plug-in hybrid electric vehicles.
The new details in the Budget confirm how eVED will operate. The Budget papers reveal that the government will introduce a new mileage estimation tool when the new system begins. One feature currently being trialled is known as benchmarking, which could assist drivers who are uncertain of their exact mileage by generating an estimate based on data from comparable vehicle types.
Budget documents reveal that drivers would be able to opt in to a tool called 'eVED Connect'. The government says this would draw on a vehicle's on-board data, meaning drivers would no longer need to report their mileage on an annual basis.
Privacy Concerns and Industry Reaction
Government documentation also indicates that officials are aiming to introduce an automatic refund model by 2030, which would simplify the refund process for those using the scheme, as well as making refunds available in a wider range of circumstances, such as when a driver overestimates their mileage or sells their vehicle.
The Budget also says that the government will work closely with the motoring industry and motoring organisations ahead of the changes coming into effect, with further guidance set to be made available for fleet operators later this year. Some critics have labelled the proposals 'Big Brother' politics, noting that petrol and diesel drivers are not currently required to inform the government of their mileage.
The government insists that drivers will not be required to report where or when their vehicles are driven, nor will they be obliged to install a tracker. The Treasury stated this week: "There will be no requirement to install trackers in cars, or report where and when miles are driven."
Nevertheless, Howard Cox, founder of the FairFuelUK campaign, told the Times: "This reeks of Big Brother Britain. Labour says it's voluntary, but for how long? Our cars, journeys and freedom to travel are ours, not Westminster's. Because fuel duty is effectively paid at the pumps, there's no need for checks on whether drivers have paid it. But this will change under pay-per-mile, with a new system needed for ensuring it is paid."
The government conducted consultations on the proposals following the 2025 Budget. Documents released in July this year revealed that a widespread concern was the difficulty in accurately estimating future mileage. Many of those who responded called for "clear guidance to support motorists in estimating their mileage, including examples, online tools or calculators, and support tailored to different user groups and circumstances".
The July documents also highlighted: "Privacy was a particularly important consideration, with many respondents arguing that any technological solution should collect only the minimum information required to administer the tax and excluding data such as vehicle location, journey history or driving behaviour."
