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Government confirms new electric vehicle mileage tax arrangements as drivers set to face 3p-per-mile charge
The Government has confirmed further details of how its planned mileage-based electric vehicle tax will operate, with high-mileage taxi and private hire drivers facing additional annual costs from April 2028.
HM Treasury announced on Wednesday 28 October that it will develop a digital reporting system called eVED Connect, alongside new mileage estimation tools and automated refund arrangements.
The announcements form part of Budget 2026 and build on the Electric Vehicle Excise Duty proposals first announced in November 2025.
Under the existing plans, fully electric and hydrogen fuel cell cars will be charged 3p per mile, while plug-in hybrid cars will face a rate of 1.5p per mile.
For an electric taxi or private hire vehicle covering 30,000 miles annually, the charge would amount to £900 at the initial rate. A plug-in hybrid covering the same distance would incur £450.
The mileage charge will apply in addition to existing Vehicle Excise Duty rather than replacing it.
The Government has now confirmed that a mileage estimation tool will be available when the tax launches in April 2028.
It will also develop eVED Connect, an optional system allowing motorists to use their vehicles’ existing connectivity to report mileage without entering readings manually.
The technology could additionally help motorists estimate their expected mileage for the following year, although the Government has not specified when the connected reporting service will become operational.
Treasury documents also establish a target of 2030 for introducing automated refunds, including circumstances where motorists overestimate their mileage or sell their vehicles.
Under the arrangements previously published in July, motorists would generally carry unused mileage credits into their next licensing period, with cash refunds initially available only in limited circumstances.
The Government has also committed to publishing further guidance for fleet operators before the end of 2026.
Earlier consultation documents confirmed that fleet and leasing businesses would receive tailored arrangements, including bulk vehicle licensing and greater payment flexibility.
The new tax will be administered through the Driver and Vehicle Licensing Agency, with registered keepers required to provide mileage information and estimate future usage.
The Government intends to introduce the legislation through Finance Bill 2026-27. The April 2028 implementation date remains unchanged.
The final operational arrangements for connected reporting and automated refunds remain under development.
