Three groups of electric vehicle (EV) drivers will be eligible for refunds on overpaid mileage under the new pay-per-mile car tax system announced by Labour Party Chancellor Rachel Reeves, scheduled to begin in April 2028. The system, which charges 3p per mile, requires drivers to estimate their annual mileage and prepay for the year ahead.
Refund Eligibility Criteria
According to the government consultation, refunds on overpayments will only be granted if the overpayment exceeds £100, the driver has experienced an “unforeseen change in financial circumstances,” and they are at risk of financial hardship. The government stated: "The government expects motorists and other keepers to provide accurate mileage estimates to minimise the risk of significant balancing payments when mileage is reconciled."
Exemptions and Simplifications
Under the new system, new EVs under three years old will not require extra mileage inspections before their first MOT. Fleet operators and leasing companies will benefit from simplified reporting rules, and businesses may use estimated mileage in some circumstances. Bulk licensing arrangements and more flexible payment options will also be introduced.
Industry Response
BVRLA chief executive Toby Poston commented that ministers had “taken some of the roughest edges off” the proposals by recognising the needs of fleet operators. However, he warned that increasing the cost of owning an electric car could make the UK’s transition to zero-emission motoring more difficult.
Implementation Timeline
The pay-per-mile tax is scheduled to begin in April 2028, with further legislation and detailed guidance to be published before then. The consultation also notes that EV drivers do not pay any similar mileage-based charge to the fuel duty that petrol and diesel drivers pay.
