Wondering how the duty on electric cars will actually be charged from 2028? It's a mileage-based levy tied into the existing DVLA system, with estimates up front and a true-up later. Here's the practical shape of it, without the jargon ...
Duty on electric cars, Eco-friendly drive, Future in motion
The duty on electric cars is designed to replace some of the revenue the Treasury currently gets from fuel duty, as more and more drivers move away from petrol and diesel. The logic is simple enough: if motorists aren't buying taxed fuel, the system looks for another way to reflect road use.
The policy aims to do this without putting people off choosing zero-emission vehicles!
In practice, the levy sits alongside Vehicle Excise Duty, rather than replacing it, and it's expected to be administered through the same DVLA channels motorists already use for VED. That matters because it signals the government wants something familiar in form, even if the calculation is new. For drivers used to the usual EV road tax conversations and car tax bands, this is a shift from valuing ownership to measuring use.
The headline mechanic is mileage. A driver will be asked to predict how far the car will travel in the year ahead when the VED is due, then pay based on that estimate either in one go or spread across the year. At the end of the year, the driver submits the actual mileage, and the account is reconciled, so underpayments and overpayments can be corrected in a structured way.
That approach makes the duty on electric cars feel more like a pay-as-you-go system, even though the cashflow starts with an estimate.
Rates are expected to be set per mile and then uprated with inflation in later years. For 2028–29, the proposal is 3p per mile for battery electric cars and 1.5p per mile for plug-in hybrids, reflecting that plug-in models will still contribute through fuel duty. This is where the duty on electric cars tries to stay balanced: it charges for distance, but acknowledges that not all drivetrains are stepping away from taxed fuel at the same pace.
To keep the mileage figure credible, the plan relies on annual checks!
Where a vehicle already needs an MOT each year, the mileage reading would be captured at the MOT and used as the anchor for reporting. For newer cars not yet in the MOT cycle, the expectation is that an accredited provider would check the mileage around the first and second anniversaries. It is deliberately administrative rather than high-tech, suggesting the government is aiming for compliance without turning the system into constant monitoring.
One detail that will matter to anyone who buys or sells used electric cars is how paid mileage is treated at the change of keeper.
The proposal is that mileage already paid for 'stays with the vehicle', meaning the financial history moves with the car rather than being wiped clean at sale. That makes the duty on electric cars partly a characteristic of the car's position in the year, not just the person behind the wheel, and it will likely influence how dealers and private sellers explain a vehicle's status.
Another point some drivers will clock quickly is that overseas miles are expected to count too, as long as the car is UK-registered. That means a holiday road trip on the continent isn't outside the scope just because it happened off British roads. From a policy perspective, it keeps the system consistent: mileage is mileage, and the duty on electric cars is based on distance rather than geography.
Responsibility is expected to sit with the registered keeper!
This is straightforward for most private owners, but more complex for fleets, company cars, and leasing arrangements. The government has signalled that these cases may need tailored processes, because the person driving, the person paying, and the person registered are not always the same. If this is implemented cleanly, it could prevent the duty on electric cars from becoming an administrative headache for businesses that are otherwise ready to electrify.
For motorists trying to place this change in the wider tax picture, it helps to think of it as a new layer rather than a replacement.
EV road tax has already moved away from the early era where electric meant broadly exempt, and the direction of travel is towards normalising electric motoring within the wider framework of vehicle excise duty and the existing car tax bands. The difference now is that distance becomes explicitly monetised, even for zero-emission vehicles.
By April 2028, the key practical question won't be whether a driver supports the principle, but how accurately they can estimate miles and how painless the reconciliation feels. If the reporting and checking steps are smooth, the duty on electric cars will feel like a predictable running cost; if they are clunky, it will feel like a yearly audit.
Either way, the duty on electric cars is set to become a routine part of budgeting for electric motoring here in the United Kingdom from 2028.
If anything I've written in my blog post resonates with you and you'd like to discover more of my thoughts about the new duty on electric cars starting in 2028, then do call me on 01908 774320 and let's see how I can help you.
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Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach.
Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.
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