Proposed mileage charge could cost electric car drivers about £300 a year

Drivers of battery-electric cars could pay about £300 a year in a new mileage-based tax from April 2028, based on an average annual distance of 10,000 miles and estimates from Octopus Electric Vehicles.

The proposed rate is 3p per mile for battery-electric vehicles and 1.5p per mile for plug-in hybrids. At the battery-electric rate, someone travelling 5,000 miles in a year would owe an additional £150, according to Octopus’s calculations.

The government plans to introduce a mileage-estimation tool when eVED begins. Budget documents describe an optional service called eVED Connect, which would use data from a vehicle’s onboard systems so drivers would not have to submit an annual mileage figure themselves. Another feature being trialled, benchmarking, could estimate mileage by comparing a vehicle with similar types.

The government says drivers will not have to install a tracker or report where and when they travel. The proposals follow concerns raised in consultation that motorists might struggle to predict their mileage and that any technical system should collect as little information as possible.

The system is intended to address the difference in tax treatment between electric and petrol or diesel cars. Drivers of petrol and diesel vehicles pay fuel duty when buying fuel, while electric cars do not use petrol or diesel. The government’s stated rationale is that the shift towards electric vehicles reduces fuel-duty receipts used to fund public services.

The government set out the proposed mileage charges in its 2025 Budget; the later Budget details described how the charge could be administered. The levy is scheduled to start in 2028, rather than being in force now.

The government is also aiming to introduce an automatic refund model by 2030. Budget documents say this could make refunds simpler and cover more situations, including when a driver has overestimated mileage or sells a vehicle. Further guidance for fleet operators is due later this year, and the government says it will work with motoring organisations and industry ahead of the start date.

The prospect of mileage-based charging has drawn criticism over privacy and the possibility of future monitoring. The government’s position is that drivers will not be required to disclose journey times or locations, and that use of eVED Connect would be voluntary.

Information on this page is refreshed from the connected theuk.fyi services when the interactive page loads.