The Government’s proposed pay-per-mile electric vehicle duty risks undermining the EV transition, branding it “the wrong tax at the wrong time” as costs mount across fleet operators.
New analysis from the British Vehicle Rental and Leasing Association suggests the scheme could cost the sector around £260 million a year by 2028 in compliance alone, driven by £75 million in administration and £185 million in lost productivity, as vehicles are taken off the road for mileage checks.
With BVRLA members operating 1.1 million electric and plug-in hybrid vehicles, rising to 1.5 million by 2027, the scale of the impact is set to grow quickly.
Fleet operators argue the system introduces complexity into a market that depends on scale efficiency, requiring mileage to be estimated, reported, verified and reconciled across vehicles that are rarely physically inspected due to leasing models.
Toby Poston, Chief Executive of the BVRLA, told MPs the policy is being introduced “in the wrong way at the wrong time” and warned: “This is not a marginal cost. It is a significant operational burden that ultimately feeds through to businesses and consumers who rely on these vehicles every day.”
He added: “It is an inefficient policy that adds unnecessary friction into a sector that is already investing heavily in decarbonisation.”
The figures suggest compliance alone could absorb around 10% of revenues raised, with some estimates putting the true cost far higher once operational disruption is factored in.
Fiona Howarth, Founder and Director of Octopus Electric Vehicles, said: “By 2028, this is set to cost fleet operators around £250 million a year… A pay-per-mile approach risks doing the opposite. It adds complexity and cost just as drivers are starting to see EVs as the simpler, better option.”
“This is increasingly looking like the wrong tax at the wrong time.”
Industry groups warn the policy could deter adoption, penalise early EV users and send mixed signals at a critical stage of the transition, calling on Government to rethink the design before it becomes embedded.
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