Controversial pay-per-mile car taxes will be introduced in 2028, the Government has confirmed, as millions of drivers face an extra tax burden after Chancellor Rachel Reeves’ announcement last year.
The Chancellor introduced Electric Vehicle Excise Duty (eVED) in the 2025 Autumn Budget in a bid to plug a financial black hole left by dwindling fuel duty revenues as more drivers switch away from petrol and diesel vehicles.
Electric car owners will be charged 3p per mile, while plug-in hybrid drivers are expected to pay 1.5p for every mile they drive once the rules are introduced in April 2028.
A consultation on the eVED charge ran between November 2025 and March this year, with the Government receiving more than 5,000 responses to the controversial measures.
In response to the consultation, the Government has confirmed that it will not proceed with the proposed requirement for vehicles under three years old, which are not currently required to have an annual MOT, to have additional mileage checks.
For vehicles under three years old, at each VED renewal, motorists will be required to provide an odometer reading and estimate mileage for the year ahead so the DVLA can calculate an estimated eVED liability.
MOT tests will also see a verified odometer reading take place, which can be compared with the mileage readings taken by the vehicle owner.
The Department for Transport reported that respondents “supported a number of aspects”, including MOT mileage checks and the use of technology.
However, respondents also highlighted that eVED could increase the overall tax burden for electric and plug-in hybrid drivers, as well as weaken incentives for motorists to switch to EVs.
Fraud was also identified as a potential issue, as motorists could tamper with the odometer to show a lower mileage to avoid paying as much in eVED.
To mitigate some of the concerns, the Government has “significantly simplified” arrangements for fleets and leasing companies to reflect the burdens they face when managing large groups of vehicles.
This will include allowing the use of estimated mileage readings, introducing bulk licensing arrangements and providing greater flexibility with payments.
The response stated that these measures will make the pay-per-mile car tax regime simpler for drivers and businesses, describing it as a “fair, proportionate and sustainable approach”.
Labour has also rejected calls for certain motorists to benefit from “free miles” or other incentives that had been touted by motoring experts.
Experts had called for rural motorists, who often need to travel further to access amenities and services, to be given “free miles” to account for the extra travel.
The consultation response stated: “The design of eVED is intended to mirror the contribution made by drivers of petrol and diesel vehicles through fuel duty, for which these groups are not exempt.
“For example, motorists who drive more miles each year, including many rural motorists and those who rely on their vehicles for essential journeys, already pay more in fuel duty because they consume more fuel.”
The Government stated that the eVED rate will be uprated from 2029-2030 in line with CPI inflation to “ensure that the tax maintains its real terms value”.
In the near future, the Government will work with the DVLA to ensure everyone impacted will have clear guidance and sufficient time to prepare for the sweeping changes.
It will also finalise the compliance, penalties, appeals and dispute resolution approach, while also working with fleets and leasing businesses.
